BILL NUMBER: AB 1107	CHAPTERED  07/22/99

	CHAPTER   146
	FILED WITH SECRETARY OF STATE   JULY 22, 1999
	APPROVED BY GOVERNOR   JULY 22, 1999
	PASSED THE ASSEMBLY   JUNE 16, 1999
	PASSED THE SENATE   JUNE 15, 1999
	AMENDED IN SENATE   JUNE 15, 1999

INTRODUCED BY   Assembly Members Cedillo, Villaraigosa, and Gallegos
and Senators Solis, Escutia, Figueroa, Johnston, Speier, and
Vasconcellos
   (Coauthor:  Assembly Member Ducheny)

                        FEBRUARY 25, 1999

   An act to amend Section 2815.1 of the Business and Professions
Code, to repeal Section 95030 of the Government Code, to amend
Sections 1179.3, 1276.5, 123870, 123900, 123940, 124250, and 128405
of, and to add Chapter 1.5 (commencing with Section 150) to Part 1 of
Division 1 of, to add Chapter 1.5 (commencing with Section 120390)
to Part 2 of Division 105 of, and to add and repeal Article 1.5
(commencing with Section 104160) to Chapter 2 of Part 1 of Division
103 of, the Health and Safety Code, to amend Sections 12693.02,
12693.06, 12693.21, 12693.41, 12693.43, 12693.62, 12693.70, 12693.73,
and 12693.91 of, to amend and renumber Section 12963.96 of, and to
add Sections 12393.17, 12693.69, and 12693.76 to, the Insurance Code,
to amend Section 17273 of the Revenue and Taxation Code, and to
amend Sections 4640.6, 4647, 4681.3, 14005.30, 14007.5, 14053, 14067,
14085.7, 14085.8, 14094.3, 14105.31, 14105.33, 14105.35, 14105.37,
14105.38, 14105.39, 14105.4, 14105.405, 14105.41, 14105.42, 14105.91,
14105.915, 14105.916, 14105.981, 14110.6, 14110.7, 14132, 14132.22,
14163, 16809, 18993.9, 24001, and 24005 of, to add Sections 4441.5,
5701.1, 6501, 14007.65, 14007.7, 14008.85, 14011.15, 14018.5,
14053.1, 14087.301, 14107.11, 24003.2, 24003.5, and 24007.5 to, to
add Article 1.3 (commencing with Section 14043) to Chapter 7 of Part
3 of Division 9 of, and to repeal and add Section 24027 of, the
Welfare and Institutions Code, relating to health care, making an
appropriation therefor, and declaring the urgency thereof, to take
effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1107, Cedillo.   Health Care.
   Existing law establishes the California Registered Nurse Education
Program, within the Minority Health Education Professions
Foundation, under which persons from demographically underrepresented
groups or persons who agree in writing prior to graduation to serve
in an eligible county health facility or a health manpower shortage
area, may apply for awards to assist students in completing nursing
programs meeting specified standards.
   Existing law creates the Registered Nurse Education Fund, to be
used for the purposes of this program.  This fund contains a $5
assessment, which is collected by the Board of Registered Nursing at
the time of the biennial registered nursing licensure renewal.
   Under existing law, provisions establishing the California
Registered Nurse Education Program and the licensure renewal
assessment collected for that purpose would be repealed on January 1,
2000.
   This bill would extend the duration of these provisions until
January 1, 2003.
   Under existing law, the California Early Intervention Services
Act, various state departments provide coordinated services to
infants and toddlers with disabilities and their families.
   Under existing law, the act will repeal on January 1, 2000.
   This bill would indefinitely extend the duration of these
provisions.
   Existing law establishes various programs administered by the
State Department of Health Services to assist minority populations
and underserved areas.
   This bill would establish the Office of Multicultural Health in
the department in order to perform specified functions.
   Existing law establishes the Breast Cancer Control Program, which
provides early breast cancer detection services for uninsured and
underinsured women.
   This bill would, until July 1, 2000, establish the Breast Cancer
Treatment Program, to be administered by an eligible private
nonprofit organization contracting with the State Department of
Health Services, for the purpose of providing breast cancer treatment
services to uninsured and underinsured women with incomes at or
below 200% of the federal poverty level, to the extent funds are
available for that purpose.
   Existing law requires the Rural Health Policy Council to develop
and administer a competitive grants program for health delivery
projects in rural areas.  Existing law requires the Office of
Statewide Health Planning and Development to administer funds
appropriated for this purpose by the Budget Act of 1998.  Under
existing law, these provisions become inoperative on July 1, 1999,
and are repealed on January 1, 2000.
   This bill would instead require the office to administer funds
appropriated for this purpose by any act.  This bill would provide
that upon appropriation, the funds may be expended in the fiscal year
of the appropriation or the subsequent fiscal year.  This bill would
delete the dates upon which these provisions would become
inoperative and be repealed.
   Existing law requires the Maternal and Child Health branch of the
State Department of Health Services to administer a comprehensive
shelter-based services grant program to battered women's shelters.
   Existing law requires the department, in implementing this
program, to consult with an advisory council which would remain in
existence until January 1, 1998.
   This bill would extend the date of the existence of this advisory
council to January 1, 2003.
   Under existing law, persons are required to be immunized against
specified communicable diseases prior to admission to daycare
institutions or schools.  Existing law requires immunization against
hepatitis B for all students unconditionally entering or
unconditionally advancing to the 7th grade level on or after July 1,
1999.
   This bill would require the State Department of Health Services,
in consultation with, the Trustees of the California State
University, and the Regents of the University of California, to adopt
and enforce regulations relating to the immunization of first-time
enrollees at the institutions against the hepatitis B virus.
   The bill would require, with prescribed exceptions, the Trustees
of the California State University, and the Regents of the University
of California, to the extent the regents act by resolution to make
this bill applicable to the university, require that first-time
enrollees who are 18 years of age or younger provide proof of full
immunization against the hepatitis B virus, prior to enrollment.
   Existing law creates the Healthy Families Program, administered by
the Managed Risk Medical Insurance Board, to arrange for the
provision of health care services to children older than 12 months
and less than 19 years of age who meet certain criteria, including
having a gross household income equal to or less than 200% of the
federal poverty level, and meeting the citizenship and immigration
status requirements established by federal law.  Existing law
requires families with children participating in the program to pay
specified family contribution amounts.
   The bill would expand coverage to include families with an annual
or monthly household income greater than 200% of the federal poverty
level by use of an income disregard provision for income between 200
and 250%, inclusive, of the federal poverty level, and specified
Medi-Cal income deductions for income over 250% of the federal
poverty level.  The bill would modify eligibility under the program
to include children less than 12 months of age in a family.  The bill
would permit a minor to apply for coverage on behalf of his or her
child, and on behalf of herself or himself if emancipated or not
living with a natural or adoptive parent, legal guardian, or
caretaker relative, foster parent, or stepparent.  The bill would
provide that a child who is a qualified alien, as defined in federal
law and who is otherwise eligible for participation in the program,
shall not be denied eligibility based on the child's date of entry
into the United States.  The bill would not require federal financial
participation for qualified aliens in the 1999-2000 budget year, but
would require that participation in subsequent fiscal years.
   Existing law requires applicants for the Healthy Families Program
who apply for the purchasing pool to pay the first month's family
contribution to be eligible to participate in the program.  Existing
law requires subscribers and purchase credit members of the Healthy
Families Program to pay monthly contributions.  Existing law provides
a 4th consecutive month of coverage with no family contribution
required if an applicant pays 3 months of required family
contributions in advance.
   This bill would permit a family contribution sponsor to pay all of
the annual required family contributions at the time of application,
but would not permit a family contribution sponsor to receive the
free months of coverage provided to applicants.  The bill would
require the Managed Risk Medical Insurance Board to determine who may
be family contribution sponsors and to provide a mechanism for
sponsorship.
   Existing law permits initial treatment, as specified, up to 30
days prior to the effective date of coverage under the Healthy
Families Program.
   This bill would permit initial treatment up to 90 days prior to
the effective date of coverage.
   Existing law continuously appropriates money from the Healthy
Families Fund for purposes of implementation of the Healthy Families
Program.
   This bill, by liberalizing various eligibility criteria for
participation within this program and thereby covering a new pool of
participants, would make the moneys in this continuously appropriated
fund available for a new or expanded purpose, and would thereby
result in an appropriation.
   Existing law, the Robert W. Crown California Children's Services
Act, provides for treatment services for physically defective or
handicapped persons under the age of 21 years.  Existing law limits
eligibility to families with an adjusted gross income of $40,000 or
less.  Existing law requires a family to pay an annual enrollment fee
for the California Children's Services program, except as specified.
  Existing law requires a county expenditure for services to
handicapped children of the county, as specified.
   This bill would permit children enrolled in the Healthy Families
Program who have a California Children's Services program (CCS
program) eligible medical condition, and whose families do not meet
the financial eligibility requirements of the CCS program, to receive
CCS program benefits.  The bill would exempt these families from the
annual enrollment fee.  The bill would waive county expenditures for
services to these children, and would make corresponding changes in
the Healthy Families Program to require the state to pay the
expenditures from designated state and federal funds.
   Under existing provisions of the Healthy Families Program,
operative until July 1, 2003, the State Department of Health
Services, in conjunction with the Managed Risk Medical Insurance
Board, the County Medical Services Program board, and the Rural
Health Policy Council, may develop and administer up to 5
demonstration projects in rural areas that are likely to contain a
significant level of uninsured children, including seasonal and
migratory worker dependents, to fund rural collaborative health care
networks to alleviate unique problems of access to health care in
rural areas through grants to entities that meet the criteria and
standards for eligibility established by the State Department of
Health Services, in conjunction with the Managed Risk Medical
Insurance Board and Rural Health Policy Council.
   This bill would require that, subject to appropriation by the
Legislature, these grant funds be used for purchasing equipment,
making capital expenditures, and providing infrastructure.
   The Personal Income Tax Law, by reference to specified federal
statutes, for taxable years beginning on or after January 1, 1999,
allows a deduction for 40% of the amount paid or incurred during the
taxable year by a self-employed individual for insurance that
constitutes medical care for the taxpayer and his or her spouse and
dependents.  Existing federal law incrementally increases that
deduction to certain percentage rates.  Under federal law, a 60%
deduction is allowed for taxable years beginning in calendar year
1999 through 2001, a 70% deduction is allowed for taxable years
beginning in calendar year 2002, and a 100% deduction is allowed for
taxable years beginning in calendar year 2003 or thereafter.
   This bill would conform the deduction allowed under the Personal
Income Tax Law to the applicable federal percentage of the amount
paid or incurred for taxable years beginning on or after January 1,
1999.
   Under existing law, the State Department of Developmental Services
contracts with regional centers for the provision of services and
supports to persons with developmental disabilities.
   Existing law requires the department, when approving regional
center contracts, to ensure that regional center staffing patterns
demonstrate that direct service coordination is the highest priority.

   Existing law also requires that these contracts have
consumer-to-staff ratios that reflect an overall average of 62
consumers to each staff member.
   Existing law also requires that a regional center assign a service
coordinator, who shall be responsible for implementing, overseeing,
and monitoring each client's individual program plans.
   This bill would enact specified regional center service
coordinator-to-consumer ratios.  It would require, by December 15,
1999, the department to make recommendations to the Legislature
regarding the core staffing formula used to allocate operations
funding to regional centers, and would require each regional center
to provide the department with service coordinator caseload data.
   The bill would also require that the regional centers provide the
consumer, or where appropriate, his or her parents, legal guardian or
conservator or authorized representative, with written notification
of any permanent change in the assigned service coordinator within 10
business days.
   Under existing law, certain persons with developmental
disabilities are placed in state developmental centers operated by
the State Department of Developmental Services.
   This bill would require the department to develop policies and
procedures, by no later than 30 days following the effective date of
the Budget Act of 1999, at each developmental center, for the
notification of appropriate law enforcement agencies in the event of
a forensic client walkaway or escape.
   Existing law contains provisions governing rates for community
care facilities serving persons with developmental disabilities.
   This bill would require that, for the 1999-2000 fiscal year, the
rate schedule for these facilities be increased July 1, 1999, based
upon the amount appropriated in the Budget Act of 1999 for that
purpose, and that effective January 1, 2000, any funds available from
cost-of-living adjustments in the Supplemental Security Income State
Supplementary Payment for the 1999-2000 fiscal year be used to
further increase these rates.
   Existing law requires the State Department of Mental Health to
identify, from mental health block grant funds provided by the
federal government, the maximum amount that federal law and
regulation permit to be allocated to cities and counties according to
a specified formula.
   This bill would authorize the department, in consultation with the
California Mental Health Directors Association, to utilize funding
from the Substance Abuse and Mental Health Services Administration
Block Grant, awarded to the department, above the funding level
provided in federal fiscal year 1998, for the development of
innovative mental health programs for identified target populations,
upon appropriation by the Legislature.
   Existing law contains provisions governing placement of persons
with developmental disabilities.
   This bill would provide that when an individual charged with a
violent felony has been committed to the State Department of
Developmental Services, due to a finding of incompetency to stand
trial, for placement in a secure treatment facility, the department
shall give priority to placing the individual at Porterville
Developmental Center prior to placing him or her at any other
developmental center which has been designated as a secure treatment
facility.
   Existing law provides for the Medi-Cal program, administered by
the State Department of Health Services, under which basic health
care services are provided to qualified low-income persons.
   Under existing law, a child is eligible to receive Medi-Cal
benefits if the child meets certain deprivation requirements.
   This bill would revise those requirements, effective March 1,
2000.
   Existing law requires the department, not later than July 1, 1998,
to create and implement a simplified application package for
children, pregnant women, and infants.
   This bill would require the department, by July 1, 2000, to create
and implement a simplified application package for children,
families, and adults applying for Medi-Cal.  It would also require
the department, by July 1, 2000, to revise the quarterly reporting
form for Medi-Cal beneficiaries to be as simple as possible to
complete.
   Under existing law, counties are responsible for the
implementation of eligibility determinations under the Medi-Cal
program.
   By extending the eligibility for benefits under the Medi-Cal
program and modifying the eligibility determination process, this
bill would increase the responsibilities of the counties in the
administration of the Medi-Cal program, and would result in a
state-mandated local program.
   Existing law requires the State Department of Health Services to
exercise its option under federal law authorizing states to use
income and resource methodologies that are less restrictive than the
methodologies used under the state plan meeting certain eligibility
standards for families with dependent children to expand eligibility
under the Medi-Cal program, to the extent federal financial
participation is available.
   This bill would specify that the department shall exercise that
option by exempting all resources, commencing August 1, 1999, if
federal financial participation is available.
   Under existing California law, any alien who is otherwise eligible
for Medi-Cal services, but who does not meet specified requirements
relating to residency status, is only eligible for care and services
that are necessary for the treatment of an emergency medical
condition and medical care directly related to the emergency and for
medically necessary pregnancy-related services.  However, the federal
Personal Responsibility and Work Opportunity Reconciliation Act of
1996 makes any alien who is not a qualified alien, as defined,
ineligible for federal public benefits, including medical assistance
under the federal medicaid program for assistance other than care and
services necessary for the treatment of an emergency medical
condition.  Federal law also prohibits a state from providing defined
state public benefits to certain aliens, unless state legislation is
enacted subsequent to the effective date of the act, August 22,
1996.
   This bill would provide that any alien who is otherwise eligible
for Medi-Cal services, but who does not meet specified requirements
relating to residency status, is eligible for medically necessary
pregnancy-related services.
   Under existing law, counties are responsible for determining
eligibility for Medi-Cal benefits.  By making certain aliens eligible
for Medi-Cal benefits, this bill would increase county
responsibilities in making eligibility determinations, and would
result in a state-mandated local program.
   Under existing state law, certain aliens ineligible for the full
scope of Medi-Cal benefits are eligible to receive long-term care
benefits.
   This bill would provide that any alien who is otherwise eligible
for Medi-Cal services, but who does not meet the requirements to
receive the full scope of Medi-Cal benefits due to his or her alien
status, shall be eligible for long-term care services.
   Since the bill would affect the eligibility of persons for
programs administered by local agencies and school districts, it
would constitute a state-mandated local program.
   Existing law, operative until July 1, 2000, provides for the
State-Only Family Planning Program, in order to provide family
planning comprehensive clinical services to eligible low-income
persons.
   This bill would indefinitely extend the duration of this program.
The bill would also establish a program, within the Medi-Cal
program, known as the Family Planning Access, Care, and Treatment
(Family PACT) Waiver Program, to provide comprehensive clinical
family planning services to any person whose family income is not in
excess of 200% of the federal poverty level, to be operational only
if a waiver is obtained from the federal government.  It would repeal
the provisions establishing this program on the first day of the
month following 30 days after the date that a written notification is
submitted to specified legislative committee chairpersons by the
Department of Finance stating that the program is no longer
cost-effective.
   The bill would also, if this waiver is received for this program,
add certain services to those provided under the State-Only Family
Planning Program.
   The bill would also appropriate $5,000,000 to the State Department
of Health Services for purposes of the Partnership for Responsible
Parenting Program.
   Under existing law, persons who are at least 21 years of age, but
who have not attained the age of 65 years, and who are patients in an
institution of mental diseases are eligible to receive outpatient
services under the Medi-Cal program.
   This bill would permit eligible persons to receive ancillary
outpatient services regardless of whether federal financial
participation is available.
   Existing law requires the department to adopt regulations
establishing payment rates for nursing facilities.
   This bill would require the department, commencing August 1, 1999,
to increase the Medi-Cal reimbursement for level A and level B
nursing facilities to provide funds for salaries, wages, and benefits
increases for direct care staff, as defined, and would require these
facilities to provide these increases to their direct care staff.
   Existing law also requires the department to adopt regulations
setting forth the minimum number of equivalent nursing hours per
patient day required in skilled nursing and intermediate care
facilities.
   The bill would require, commencing January 1, 2000, that the
minimum number of actual nursing hours per patient required in
skilled nursing facilities be 3.2 hours.  It would also require that,
commencing January 1, 2000, the minimum number of nursing hours per
patient day in skilled nursing facilities be determined without
regard to the doubling of nursing hours, as described.
   Existing law provides that a party that incurs a forfeiture or a
loss in the nature of a forfeiture by reason of failure to comply
with an obligation may be relieved from the forfeiture by making full
compensation to the other party, except in cases of grossly
negligent, willful, or fraudulent breach of duty.
   This bill would provide that this relief does not apply to
Medi-Cal reimbursement or prior authorization.
   Existing law permits the State Department of Health Services, in
conjunction with the Managed Risk Medical Insurance Board, to conduct
pilot outreach and education projects, through the allocation of
grant funds or a competitive process, to entities with experience in
serving uninsured children, Medi-Cal beneficiaries, or in providing
services to low-income families.
   This bill would, instead, require the department, in conjunction
with the board, to award contracts to community-based organizations
to help families learn about, and enroll in, the Medi-Cal program and
the Healthy Families Program, and other health care programs for
low-income children.
   Existing law establishes the California Children's Services
Program, in order to provide services to qualified children with
disabilities.
   Existing law prohibits, with specified exceptions, and until
August 1, 2000, services covered under that program from being
incorporated into specified contracts entered into under the Medi-Cal
program.
   This bill would extend this date until August 1, 2005.
   Existing law establishes the continuously appropriated Medi-Cal
Medical Education Supplemental Payment Fund for allocation to
university teaching hospitals and major nonuniversity teaching
hospitals and the continuously appropriated Large Teaching Emphasis
Hospital and Children's Hospital Medi-Cal Medical Education
Supplemental Payment Fund for allocation to large teaching emphasis
hospitals and children's hospitals.
   Existing law establishes that the funds are inoperative June 30,
1999, and repealed January 1, 2000.
   This bill would extend those dates by a period of one year, and by
extending the operative period of a continuously appropriated fund,
this bill would make an appropriation.
   Existing law provides that one of the services offered under the
Medi-Cal program is dental services, subject to utilization controls.

   This bill would provide that when entering into contracts with
health care service plans that provide comprehensive dental benefits
to Medi-Cal beneficiaries on an at-risk basis, the department may
require that the health care service plans pay for the costs of the
administrative and regulatory oversight required to monitor the
contract compliance terms of the agreement with the department.
   Existing law, until January 1, 2000, provides for the provision of
drugs that are reimbursed through the Medi-Cal program without prior
authorization when they are on an approved list of contract drugs.
   This bill would extend until January 1, 2001, provisions for the
use of a list of contract drugs for purposes of the Medi-Cal program.

   Existing law, until January 1, 2000, authorizes the State
Department of Health Services to enter into contracts with
manufacturers of single-source and multiple-source drugs under the
Medi-Cal program, and specifies procedures for the implementation of
that authority.
   This bill would extend that authority to January 1, 2001.
   Under the Medi-Cal program, the State Department of Health
Services is required, until January 1, 2000, to take all appropriate
steps to ensure that transitional inpatient days are included in the
payment adjustment program, as specified.
   This bill would extend that requirement until January 1, 2001.
   Existing law authorizes Medi-Cal reimbursement, until January 1,
2000, for transitional inpatient care, as defined, in general acute
care hospitals and other specified health facilities.
   This bill would extend that authorization until January 1, 2001.
   Under existing law, the State Department of Health Services is
required to evaluate and make recommendations regarding the
effectiveness and safety of the transitional inpatient care program,
by January 1, 1999.
   This bill would instead require that evaluation be made by January
1, 2000.
   Under the Medi-Cal program, the department is required to make
supplemental payments to certain disproportionate share hospitals
based on specified criteria.  Payments are made from defined
intergovernmental transfers that are paid into the Medi-Cal Inpatient
Payment Adjustment Fund, as required, with this fund being
continuously appropriated for specified purposes.  Existing law
authorizes moneys in the fund to be used for transfers to the Health
Care Deposit Fund in the amount of $114,757,690 for the 1998-99
fiscal year and each fiscal year thereafter.
   This bill would authorize, instead, transfers to the Health Care
Deposit Fund in the amount of $84,757,690 for the 1999-2000 fiscal
year and each fiscal year thereafter, and would require the
department to implement this reduction in a specified manner.  By
changing the amount of moneys transferred for purposes of the Health
Care Deposit Fund from the continuously appropriated Inpatient
Payment Adjustment Fund, the bill would result in an appropriation.
   Existing law provides that the board of supervisors of a county
that contracted with the State Department of Health Services pursuant
to a specified provision of law during the 1990-91 fiscal year and
any county with a population under 300,000, as determined in
accordance with the 1990
decennial census, by adopting a resolution to that effect, may elect
to participate in the County Medical Services Program for state
administration of health care services to eligible persons in the
county.
   Existing law provides for the State-Only Family Planning program,
under which family planning services are provided to eligible
individuals.
   This bill would authorize the department, upon reliable evidence
of fraud or willful misrepresentation by a provider under these
programs, to collect any overpayment identified through an audit or
examination from any provider or withhold payment for any goods or
services owing to the provider.
   The bill would also provide for disenrollment, in accordance with
specified limitations, for providers and prohibit enrollment for
applicants for provider status, found to have committed fraud or
abuse.
   Existing law provides that counties and the state shall share the
risk for cost increases of the County Medical Services Program not
funded through other sources according to specified parameters.
   This bill would revise those risk-sharing requirements for the
1999-2000 fiscal year.
   Existing law establishes the Community Challenge Grant Program,
administered by the State Department of Health Services, in order to
provide community challenge grants to reduce the number of teenage
and unwed pregnancies.  The provisions of this program are operative
until July 1, 1999, and would be repealed on January 1, 2000.
   Existing law also establishes the State-Only Family Planning
Program, in the department, to provide comprehensive clinical family
planning services to low-income men and women.
   This bill would extend the duration of the Community Challenge
Grant Program for one year, but would condition program
implementation on receipt of federal financial participation pursuant
to a federal waiver received under the State-Only Family Planning
Services Program.
   Existing law establishes various tobacco use prevention programs
funded through moneys derived from the Cigarette and Tobacco Products
Surtax Fund and administered by the State Department of Health
Services and the State Department of Education.
   This bill would make moneys appropriated for purposes of these
programs by the Budget Act of 1999 available without regard to fiscal
years until July 1, 2002.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement, including the creation of a State Mandates Claims Fund
to pay the costs of mandates that do not exceed $1,000,000 statewide
and other procedures for claims whose statewide costs exceed
$1,000,000.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
   This bill would declare that it is to take effect immediately as
an urgency statute.
   Appropriation:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 2815.1 of the Business and Professions Code is
amended to read:
   2815.1.  As provided in subdivision (d) of Section 2815, the Board
of Registered Nursing shall collect an additional five dollar ($5)
assessment at the time of the biennial licensure renewal.  This
amount shall be credited to the Registered Nurse Education Fund.
This assessment is separate from those fees prescribed in Section
2815.
   This section shall remain in effect only until January 1, 2003,
and as of that date is repealed, unless a later enacted statute,
which is enacted before January 1, 2003, deletes or extends that
date.
  SEC. 2.  Section 95030 of the Government Code is repealed.
  SEC. 3.  Chapter 1.5 (commencing with Section 150) is added to Part
1 of Division 1 of the Health and Safety Code, to read:

      CHAPTER 1.5.  MULTICULTURAL HEALTH

   150.  The Legislature finds and declares all of the following:
   (a) The health status of California's racial and ethnic
communities is poor relative to the health status of the white
population.
   (b) Of the estimated 24 percent of Californians without health
insurance, approximately 81 percent are from racial and ethnic
communities.
   (c) Of the uninsured in California, an estimated 38 percent are
Latino, 24 percent are Asian and Pacific Islander, and 19 percent are
African-American.
   (d) Racial and ethnic communities suffer from various infections
and communicable diseases at higher rates than the white population,
and experience increased mortality from more preventable disease
relative to the white population.  For example, the President's
Racial and Ethnic Health Disparities Initiative recognized that
infant mortality rates are 2.5 times higher for African-Americans and
1.5 times higher for native Americans than for the white population.
  African men under 65 years of age suffer from prostate cancer at
nearly five times the rate of white men and Vietnamese women suffer
from cervical cancer at nearly five times the rate of white women.
Latinos suffer from stomach cancer at two to three times the rate of
the white population, and African-American men suffer from heart
disease at nearly twice the rate of white men.  Native Americans
suffer from diabetes at nearly three times the average rate of the
white population, while African-Americans suffer 70 percent higher
rates of diabetes than the white population.
   (e) Efforts to reduce and eliminate racial and ethnic disparities
in health status have received scant attention, both in terms of
funding for prevention and treatment services, as well as research.
   (f) Program planning and implementation efforts to reduce these
health disparities have been neither inclusive of racial and ethnic
communities nor responsive to the needs of these communities.
   151.  (a) The Office of Multicultural Health is hereby established
within the State Department of Health Services.
   (b) For purposes of this chapter:
   (1) "Department" means the State Department of Health Services.
   (2) "Office" means the Office of Multicultural Health.
   152.  (a) The office shall do all of the following:
   (1) Perform strategic planning within the department to develop
departmentwide plans for implementation of goals and objectives to
close the gaps in health status and access to care among the state's
diverse racial and ethnic communities.
   (2) Conduct departmental policy analysis on specific issues
related to multicultural health.
   (3) Coordinate pilot projects and planning projects funded by the
state that are related to improving the effectiveness of services to
ethnic and racial communities.
   (4) Identify the unnecessary duplication of services and future
service needs.
   (5) Communicate and disseminate information and perform a liaison
function within the department and to providers of health, social,
educational, and support services to racial and ethnic communities.
The office shall consult regularly with representatives from diverse
racial and ethnic communities, including health providers, advocates,
and consumers.
   (6) Perform internal staff training, an internal assessment of
cultural competency, and training of health care professionals to
ensure more linguistically and culturally competent care.
   (7) Serve as a resource for ensuring that programs keep data and
information regarding ethnic and racial health statistics, strategies
and programs that address multicultural health issues, including,
but not limited to, infant mortality, cancer, cardiovascular disease,
diabetes, human immunodeficiency virus (HIV), acquired immune
deficiency syndrome (AIDS), child and adult immunization, asthma,
unintentional and intentional injury, and obesity, as well as issues
that impact the health of racial and ethnic communities, including
substance abuse, mental health, housing, teenage pregnancy,
environmental disparities, immigrant and migrant health, and health
insurance and delivery systems.
   (8) Encourage innovative responses by public and private entities
that are attempting to address multicultural health issues.
   (9) Provide technical assistance to counties, other public
entities, and private entities seeking to obtain funds for
initiatives in multicultural health, including identification of
funding sources and assistance with writing grants.
   (b) Notwithstanding Section 7550.5 of the Government Code, the
office shall biennially prepare and submit a report to the
Legislature on the status of the activities required by this chapter.

  SEC. 4.  Section 1179.3 of the Health and Safety Code is amended to
read:
   1179.3.  (a) (1) The Rural Health Policy Council shall develop and
administer a competitive grants program for projects located in
rural areas of California.
   (2) The Rural Health Policy Council shall define "rural area" for
the purposes of this section after receiving public input and upon
recommendation of the Interdepartmental Rural Health Coordinating
Committee and the Rural Health Programs Liaison.
   (3) The purpose of the grants program shall be to fund innovative,
collaborative, cost-effective, and efficient projects that pertain
to the delivery of health and medical services in rural areas of the
state.
   (4) The Rural Health Policy Council shall develop and establish
uses for the funds to fund special projects that alleviate problems
of access to quality health care in rural areas and to compensate
public and private health care providers associated with direct
delivery of patient care.  The funds shall be used for medical and
hospital care and treatment of patients who cannot afford to pay for
services and for whom payment will not be made through private or
public programs.
   (5) The Office of Statewide Health Planning and Development shall
administer the funds appropriated by the Legislature for purposes of
this section.  Entities eligible for these funds shall include rural
health providers served by the programs operated by the departments
represented on the Rural Health Policy Council, which include the
State Department of Alcohol and Drug Programs, the Emergency Medical
Services Authority, the State Department of Health Services, the
State Department of Mental Health, the Office of Statewide Health
Planning and Development, and the Managed Risk Medical Insurance
Board.  The grant funds shall be used to expand existing services or
establish new services and shall not be used to supplant existing
levels of service.  Funds appropriated by the Legislature for this
purpose may be expended in the fiscal year of the appropriation or
the subsequent fiscal year.
   (b) The Rural Health Policy Council shall establish the criteria
and standards for eligibility to be used in requests for proposals or
requests for application, the application review process,
determining the maximum amount and number of grants to be awarded,
preference and priority of projects, compliance monitoring, and the
measurement of outcomes achieved after receiving comment from the
public at a meeting held pursuant to the Bagley-Keene Open Meeting
Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1
of Division 3 of Title 2 of the Government Code).
   (c) The Office of Statewide Health Planning and Development shall
periodically report to the Rural Health Policy Council on the status
of the funded projects.  This information shall also be available at
the public meetings.
  SEC. 4.5.  Section 1276.5 of the Health and Safety Code is amended
to read:
   1276.5.  (a) The department shall adopt regulations setting forth
the minimum number of equivalent nursing hours per patient required
in skilled nursing and intermediate care facilities, subject to the
specific requirements of Section 14110.7 of the Welfare and
Institutions Code.  However, notwithstanding Section 14110.7 or any
other provision of law, commencing January 1, 2000, the minimum
number of actual nursing hours per patient required in a skilled
nursing facility shall be 3.2 hours.
   (b) (1) For the purposes of this section, "nursing hours" means
the number of hours of work performed per patient day by aides,
nursing assistants, or orderlies plus two times the number of hours
worked per patient day by registered nurses and licensed vocational
nurses (except directors of nursing in facilities of 60 or larger
capacity) and, in the distinct part of facilities and freestanding
facilities providing care for the developmentally disabled or
mentally disordered, by licensed psychiatric technicians who perform
direct nursing services for patients in skilled nursing and
intermediate care facilities, except when the skilled nursing and
intermediate care facility is licensed as a part of a state hospital,
and except that nursing hours for skilled nursing facilities means
the actual hours of work, without doubling the hours performed per
patient day by registered nurses and licensed vocational nurses.
   (2) Concurrent with implementation of the first year of rates
established under the Medi-Cal Long Term Care Reimbursement Act of
1990 (Article 3.8 (commencing with Section 14126) of Chapter 7 of
Part 3 of Division 9 of the Welfare and Institutions Code), for the
purposes of this section, "nursing hours" means the number of hours
of work performed per patient day by aides, nursing assistants,
registered nurses, and licensed vocational nurses (except directors
of nursing in facilities of 60 or larger capacity) and, in the
distinct part of facilities and freestanding facilities providing
care for the developmentally disabled or mentally disordered, by
licensed psychiatric technicians who performed direct nursing
services for patients in skilled nursing and intermediate care
facilities, except when the skilled nursing and intermediate care
facility is licensed as a part of a state hospital.
   (c) Notwithstanding Section 1276, the department shall require the
utilization of a registered nurse at all times if the department
determines that the services of a skilled nursing and intermediate
care facility require the utilization of a registered nurse.
   (d) (1) Except as otherwise provided by law, the administrator of
an intermediate care facility/developmentally disabled, intermediate
care facility/developmentally disabled habilitative, or an
intermediate care facility/developmentally disabled--nursing shall be
either a licensed nursing home administrator or a qualified mental
retardation professional as defined in Section 483.430 of Title 42 of
the Code of Federal Regulations.
   (2) To qualify as an administrator for an intermediate care
facility for the developmentally disabled, a qualified mental
retardation professional shall complete at least six months of
administrative training or demonstrate six months of experience in an
administrative capacity in a licensed health facility, as defined in
Section 1250, excluding those facilities specified in subdivisions
(e), (h), and (i).
  SEC. 5.  Article 1.5 (commencing with Section 104160) is added to
Chapter 2 of Part 1 of Division 103 of the Health and Safety Code, to
read:

      Article 1.5.  Breast Cancer Treatment Program

   104160.  The department shall award a contract to provide breast
cancer treatment to a bidder that is a nonprofit organization
established under Section 501(c)(3) of the federal Internal Revenue
Code and that meets the following additional eligibility criteria:
   (a) The organization has at least two consecutive years of
successful administration of a breast cancer treatment program, or
the equivalent, operated on a statewide level, or servicing a
population of at least 500 patients.
   (b) The organization has experience operating a program dedicated
to providing services to residents of California diagnosed with
primary breast cancer, who are 18 years of age or older, at or below
200 percent of the federal poverty level, and who are uninsured or
underinsured.
   (c) The organization has operated the treatment program with
administrative costs no higher than 10 percent of appropriated
program funds, or can demonstrate the ability to do so.
   (d) The organization has demonstrated ability to accomplish
recruitment and commitment of breast cancer treatment providers to
work with the program to provide care at or below established
statewide Medi-Cal base rates of reimbursement.
   104161.  For purposes of this chapter, breast cancer treatment
shall include, but shall not be limited to, lumpectomy, mastectomy,
chemotherapy, hormone therapy, radiotherapy, reconstructive surgery,
and breast implant surgery.
   104162.  Treatment under this chapter shall be provided to
uninsured and underinsured women and men with incomes at or below 200
percent of the federal poverty level.
   104163.  The department shall contract for breast cancer treatment
services only at the level of funding budgeted from state and other
sources during a fiscal year in which the Legislature has
appropriated funds to the department for this purpose.  The funds
appropriated shall be used to match any funding from non-General Fund
sources, including, but not limited to, public nonprofit
foundations.
   104164.  This article shall remain in effect only until July 1,
2000, and as of that date is repealed, unless a later enacted
statute, that is enacted before July 1, 2000, deletes or extends that
date.
  SEC. 5.5.  Chapter 1.5 (commencing with Section 120390) is added to
Part 2 of Division 105 of the Health and Safety Code, to read:

      CHAPTER 1.5.  IMMUNIZATION OF COLLEGE-AGE STUDENTS

   120390.  The department, in consultation with the Trustees of the
California State University, and the Regents of the University of
California, shall adopt and enforce all regulations necessary to
carry out this chapter.
   120390.5.  (a) Except as provided in subdivisions (b), (c), and
(d), on or after January 1, 2000, the Trustees of the California
State University, and the Regents of the University of California
shall require the first-time enrollees at those institutions who are
18 years of age or younger to provide proof of full immunization
against the hepatitis B virus prior to enrollment.
   (b) A person who has not been fully immunized against the
hepatitis B virus, as required by subdivision (a), may be admitted by
the governing body of any of the institutions of higher education to
which subdivision (a) is applicable on condition that, within a
designated time period, the person will provide proof of full
immunization against hepatitis B.
   (c) Immunization of a person shall not be required for admission
to an institution of higher education to which subdivision (a) is
applicable if any of the following persons files with the governing
body of the educational institution a letter or affidavit stating
that the immunization is contrary to the beliefs of either of the
following:
   (1) The parent, guardian, or adult who has assumed responsibility
for the care and custody of the person seeking admission, if that
applicant is a minor who is not emancipated or who is 17 years of age
or younger.
   (2) The person seeking admission, if that applicant is an
emancipated minor or is 18 years of age.
   (d) If a person seeking enrollment in an institution of higher
education to which subdivision (a) is applicable, or the parent or
guardian of a person seeking enrollment, files with the governing
body a written statement by a physician and surgeon that the physical
condition of the person or medical circumstances relating to the
person are such that immunization is not considered safe, indicating
the specific nature and probable duration of the medical condition or
circumstances that contraindicate immunization, that person shall be
exempt from the requirements of subdivision (a).
   120390.7.  No provision of this chapter shall apply to the
University of California except to the extent that the Regents of the
University of California, by appropriate resolution, make that
provision applicable.
  SEC. 6.  Section 123870 of the Health and Safety Code is amended to
read:
   123870.  (a) The department shall establish standards of financial
eligibility for treatment services under the California Children's
Services Program (CCS program).
   (1) Financial eligibility for treatment services under this
program shall be limited to persons in families with an adjusted
gross income of forty thousand dollars ($40,000) or less in the most
recent tax year, as calculated for California state income tax
purposes.  If a person is enrolled in the Healthy Families Program
(Part 6.2 (commencing with Section 12693) of Division 2 of the
Insurance Code), the financial documentation required for that
program in Section 2699.6600 of Title 10 of the California Code of
Regulations may be used instead of the person's California state
income tax return.  However, the director may authorize treatment
services for persons in families with higher incomes if the estimated
cost of care to the family in one year is expected to exceed 20
percent of the family's adjusted gross income.
   (2) Children enrolled in the Healthy Families Program who have a
CCS program eligible medical condition under Section 123830, and
whose families do not meet the financial eligibility requirements of
paragraph (1), shall be deemed financially eligible for CCS program
benefits.
   (b) Necessary medical therapy treatment services under the
California Children's Services Program rendered in the public schools
shall be exempt from financial eligibility standards and enrollment
fee requirements for the services when rendered to any handicapped
child whose educational or physical development would be impeded
without the services.
   (c) All counties shall use the uniform standards for financial
eligibility and enrollment fees established by the department.  All
enrollment fees shall be used in support of the California Children's
Services Program.
   (d) Annually, every family with a child eligible to receive
services under this article shall pay a fee of twenty dollars ($20),
that shall be in addition to any other program fees for which the
family is liable.  This assessment shall not apply to any child who
is eligible for full scope Medi-Cal benefits without a share of cost,
for children receiving therapy through the California Children's
Services Program as a related service in their individualized
education plans, for children from families having incomes of less
than 100 percent of the federal poverty level, or for children
covered under the Healthy Families Program.
  SEC. 7.  Section 123900 of the Health and Safety Code is amended to
read:
   123900.  (a) Beginning September 1, 1991, in addition to any other
standards of eligibility pursuant to this article, each family with
a child otherwise eligible to receive services under this article
shall pay an annual enrollment fee as a requirement for eligibility
for services, except as specified in subdivision (f).
   (b) The department shall determine the annual enrollment fee, that
shall be a sliding fee scale based upon family size and income, and
shall be adjusted by the department to reflect changes in the federal
poverty level.
   (c) "Family size" shall include the child, his or her natural or
adoptive parents, siblings, and other family members who live
together and whose expenses are dependent upon the family income.
   (d) "Family income" for purposes of this article, shall include
the total gross income, or their equivalents, of the child and his or
her natural or adoptive parents.
   (e) Payment of the enrollment fee is a condition of program
participation.  The enrollment fee is independent of any other
financial obligation to the program.
   (f) The enrollment fee shall not be charged in any of the
following cases:
   (1) The only services required are for diagnosis to determine
eligibility for services, or are for medically necessary therapy
pursuant to Section 123875.
   (2) The child is otherwise eligible to receive services and is
eligible for full Medi-Cal benefits at the time of application or
reapplication.
   (3) The family of the child otherwise eligible to receive services
under this article has a gross annual income of less than 200
percent of the federal poverty level.
   (4) The family of a child otherwise eligible to receive services
under this article who is enrolled in the Healthy Families Program
(Part 6.2 (commencing with Section 12693) of Division 2 of the
Insurance Code).
   (g) Failure to pay or to arrange for payment of the enrollment fee
within 60 days of the due date shall result in disenrollment and
ineligibility for coverage of treatment services 60 days after the
due date of the required payment.
   (h) The county shall apply the enrollment fee scale established by
the department and shall collect the enrollment fee.  The county may
arrange with the family for periodic payment during the year if a
lump-sum payment will be a hardship for the family.  The agency
director of California Children's Services may, on a case-by-case
basis, waive or reduce the amount of a family's enrollment fee if, in
the director's judgment, payment of the fee will result in undue
hardship.
   (i) By thirty days after the effective date of this section or
August 1, 1991, whichever is later, the department shall advance to
each county, as a one-time startup amount, five dollars and fifty
cents ($5.50) for each county child who was receiving services under
this article on June 30, 1990, and who was not a Medi-Cal
beneficiary.  This one-time payment shall be in addition to the 4.1
percent of the gross total expenditures for diagnoses, treatment, and
therapy by counties allowed under subdivision (c) of Section 123955.

   (j) Each county shall submit to the state, as part of its
quarterly claim for reimbursement, an accounting of all revenues due
and revenues collected as enrollment fees.
  SEC. 8.  Section 123940 of the Health and Safety Code is amended to
read:
   123940.  (a) (1) Annually, the board of supervisors shall
appropriate a sum of money for services for handicapped children of
the county, including diagnosis, treatment, and therapy services for
physically handicapped children in public schools, equal to 25
percent of the actual expenditures for the county program under this
article for the 1990-91 fiscal year, except as specified in paragraph
(2).
   (2) If the state certifies that a smaller amount is needed in
order for the county to pay 25 percent of costs of the county's
program from this source.  The smaller amount certified by the state
shall be the amount that the county shall appropriate.
   (b) In addition to the amount required by subdivision (a), the
county shall allocate an amount equal to the amount determined
pursuant to subdivision (a) for purposes of this article from
revenues allocated to the county pursuant to Chapter 6 (commencing
with Section 17600) of Division 9 of the Welfare and Institutions
Code.
   (c) (1) The state shall match county expenditures for this article
from funding provided pursuant to subdivisions (a) and (b).
   (2) County expenditures shall be waived for payment of services
for children who are eligible pursuant to paragraph (2) of
subdivision (a) of Section 123870.
   (d) The county may appropriate and expend moneys in addition to
those set forth in subdivision (a) and (b) and the state shall match
the expenditures, on a dollar-for-dollar basis, to the extent that
state funds are available for this article.
   (e) Nothing in this section shall require the county to expend
more than the amount set forth in subdivision (a) plus the amount set
forth in subdivision (b) nor shall it require the state to expend
more than the amount of the match set forth in subdivision (c).
  SEC. 9.  Section 124250 of the Health and Safety Code is amended to
read:
   124250.  (a) The following definitions shall apply for purposes of
this section:
   (1) "Domestic violence" means the infliction or threat of physical
harm against past or present adult or adolescent female intimate
partners, and shall include physical, sexual, and psychological abuse
against the woman, and is a part of a pattern of assaultive,
coercive, and controlling behaviors directed at achieving compliance
from or control over, that woman.
   (2) "Shelter-based" means an established system of services where
battered women and their children may be provided safe or
confidential emergency housing on a 24-hour basis, including, but not
limited to, hotel or motel arrangements, haven, and safe houses.
   (3) "Emergency shelter" means a confidential or safe location that
provides emergency housing on a 24-hour basis for battered women and
their children.
   (b) The Maternal and Child Health Branch of the State Department
of Health Services shall administer a comprehensive shelter-based
services grant program to battered women's shelters pursuant to this
section.
   (c) The Maternal and Child Health Branch shall administer grants,
awarded as the result of a request for application process, to
battered women's shelters that propose to maintain shelters or
services previously granted funding pursuant to this section, to
expand existing services or create new services, and to establish new
battered women's shelters to provide services, in any of the
following four areas:
   (1) Emergency shelter to women and their children escaping violent
family situations.
   (2) Transitional housing programs to help women and their children
find housing and jobs so that they are not forced to choose between
returning to a violent relationship or becoming homeless.  The
programs may offer up to 18 months of housing, case management, job
training and placement, counseling, support groups, and classes
                                              in parenting and family
budgeting.
   (3) Legal and other types of advocacy and representation to help
women and their children pursue the appropriate legal options.
   (4) Other support services for battered women and their children.

   (d) In implementing the grant program pursuant to this section,
the State Department of Health Services shall consult with an
advisory council, to remain in existence until January 1,  2003.  The
council shall be composed of not to exceed 13 voting members and two
nonvoting members appointed as follows:
   (1) Seven members appointed by the Governor.
   (2) Three members appointed by the Speaker of the Assembly.
   (3) Three members appointed by the Senate Committee on Rules.
   (4) Two nonvoting ex officio members who shall be Members of the
Legislature, one appointed by the Speaker of the Assembly and one
appointed by the Senate Committee on Rules.  Any Member of the
Legislature appointed to the council shall meet with, and participate
in the activities of, the council to the extent that participation
is not incompatible with his or her position as a Member of the
Legislature.
   The membership of the council shall consist of domestic violence
advocates, battered women service providers, and representatives of
women's organizations, law enforcement, and other groups involved
with domestic violence.  At least one-half of the council membership
shall consist of domestic violence advocates or battered women
service providers from organizations such as the California Alliance
Against Domestic Violence.
   It is the intent of the Legislature that the council membership
reflect the ethnic, racial, cultural, and geographic diversity of the
state.
   (e) The department shall collaborate closely with the council in
the development of funding priorities, the framing of the Request for
Proposals, and the solicitation of proposals.
   (f) (1) The Maternal and Child Health Branch of the State
Department of Health Services shall administer grants, awarded as the
result of a request for application process, to agencies to conduct
demonstration projects to serve battered women, including, but not
limited to, creative and innovative service approaches, such as
community response teams and pilot projects to develop new
interventions emphasizing prevention and education, and other support
projects identified by the advisory council.
   (2) For purposes of this subdivision, "agency" means a state
agency, a local government, a community-based organization, or a
nonprofit organization.
   (g) It is the intent of the Legislature that services funded by
this program include services in underserved and ethnic and racial
communities.  Therefore, the Maternal and Child Health Branch of the
State Department of Health Services shall do all of the following:
   (1) Fund shelters pursuant to this section that reflect the
ethnic, racial, economic, cultural, and geographic diversity of the
state.
   (2) Target geographic areas and ethnic and racial communities of
the state whereby, based on a needs assessment, it is determined that
no shelter-based services exist or that additional resources are
necessary.
   (h) The director may award additional grants to shelter-based
agencies when it is determined that there exists a critical need for
shelter or shelter-based services.
   (i) As a condition of receiving funding pursuant to this section,
battered women's shelters shall do all of the following:
   (1) Provide matching funds or in-kind contributions equivalent to
not less than 20 percent of the grant they would receive.  The
matching funds or in-kind contributions may come from other
governmental or private sources.
   (2) Ensure that appropriate staff and volunteers having client
contact meet the definition of "domestic violence counselor" as
specified in subdivision (a) of Section 1037.1 of the Evidence Code.
The minimum training specified in paragraph (2) of subdivision (a)
of Section 1037.1 of the Evidence Code shall be provided to those
staff and volunteers who do not meet the requirements of paragraph
(1) of subdivision (a) of Section 1037.1 of the Evidence Code.
  SEC. 10.  Section 128405 of the Health and Safety Code is amended
to read:
   128405.  This article shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2003, deletes or extends
that date.
  SEC. 11.  Section 12693.02 of the Insurance Code is amended to
read:
   12693.02.  (a) "Applicant" means a person over the age of 18 years
who is a natural or adoptive parent; a legal guardian; or a
caretaker relative, foster parent, or stepparent with whom the child
resides, who applies for coverage under the program on behalf of a
child.
   (b) "Applicant" also means any of the following:
   (1) A  person 18 years of age who is applying on his or her own
behalf for coverage under the program.
   (2) A person who is under 18 years of age and is an emancipated
minor who is applying on his or her own behalf for coverage under the
program.
   (3) A minor who is not living in the home of a natural or adoptive
parent, a legal guardian, or a caretaker relative, foster parent or
stepparent, who is applying on his or her own behalf for coverage
under the program.
   (4) A minor who applies for coverage under the program on behalf
of his or her child.
  SEC. 12.  Section 12693.06 of the Insurance Code is amended to
read:
   12693.06.  "Family contribution" means the cost to an applicant to
enable herself or himself or an eligible child or children to enroll
in and participate in the program.  Family contribution does not
include copayments for insured services.  The family contribution may
be paid by a family contribution sponsor pursuant to Section
12693.17.
  SEC. 13.  Section 12693.17 is added to the Insurance Code, to read:

   12693.17.  "Family contribution sponsor" means a person or entity
that pays the family contribution on behalf of an applicant for the
period of 12 months from the month eligibility is established; and,
notwithstanding Section 12693.70, the payment for 12 months is made
with the application.
  SEC. 14.  Section 12693.21 of the Insurance Code is amended to
read:
   12693.21.  The board may do all of the following consistent with
the standards in this part:
   (a) Determine eligibility criteria for the program.
   (b) Determine the participation requirements of applicants,
subscribers, purchasing credit members, and participating health,
dental, and vision plans.
   (c) Determine when subscribers' coverage begins and the extent and
scope of coverage.
   (d) Determine family contribution amount schedules and collect the
contributions.
   (e) Determine who may be a family contribution sponsor and provide
a mechanism for sponsorship.
   (f) Provide or make available subsidized coverage through
participating health, dental, and vision plans, in a purchasing pool,
which may include the use of a purchasing credit mechanism, through
supplemental coverage, or through coordination with other state
programs.
   (g) Provide for the processing of applications, the enrollment of
subscribers, and the distribution of purchasing credits.
   (h) Determine and approve the benefit designs and copayments
required by health, dental, or vision plans participating in the
purchasing pool component program.
   (i) Approve those health plans eligible to receive purchasing
credits.
   (j) Enter into contracts.
   (k) Sue and be sued.
   (l) Employ necessary staff.
   (m) Authorize expenditures from the fund to pay program expenses
that exceed subscriber contributions, and to administer the program
as necessary.
   (n) Maintain enrollment and expenditures to ensure that
expenditures do not exceed amounts available in the Healthy Families
Fund and if sufficient funds are not available to cover the estimated
cost of program expenditures, the board shall institute appropriate
measures to limit enrollment.
   (o) Issue rules and regulations, as necessary.  Until January 1,
2000, any rules and regulations issued pursuant to this subdivision
may be adopted as emergency regulations in accordance with the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
The adoption of these regulations shall be deemed an emergency and
necessary for the immediate preservation of the public peace, health,
and safety or general welfare.  The regulations shall become
effective immediately upon filing with the Secretary of State.
   (p) Exercise all powers reasonably necessary to carry out the
powers and responsibilities expressly granted or imposed by this
part.
  SEC. 15.  Section 12693.41 of the Insurance Code is amended to
read:
   12693.41.  (a) Upon the effective date of coverage of a child
eligible for the program, the board shall arrange for payment of
providers who participate in the Child Health and Disability
Prevention Program pursuant to Article 6 (commencing with Section
124025) of Chapter 3 of Part 2 of Division 106 of the Health and
Safety Code, for well-child health assessments, immunizations, and
initial treatment provided up to 90 days prior to the effective date
of coverage.
   (b) The board shall pay only for those services that are eligible
for federal financial participation under Section 2105 of Title XXI
of the Social Security Act and that are approved in the required
state plan under that title, except as specified in Section 12693.76.

   (c) (1) Child Health and Disability Prevention Program providers
shall submit charges for the services under subdivision (a) on the
form or in the format specified by the department for the Child
Health and Disability Prevention Program.  Those providers shall be
reimbursed at the rates established for these services by the Child
Health and Disability Prevention Program once coverage under the
program is established.
   (2) Those providers shall submit charges for services reimbursable
under Medi-Cal on the form or in the format specified by the
department for Medi-Cal.  Those providers shall be reimbursed at the
rates established for these services by Medi-Cal once coverage under
Medi-Cal is established.
   (d) (1) The board may use the state fiscal intermediary for
medicaid to process the payments authorized in subdivision (a).
   (2) The board shall be exempt from the requirements of Chapter 7
(commencing with Section 11700) of Division 3 of Title 2 of the
Government Code and Chapter 3 (commencing with Section 12100) of Part
2 of Division 2 of the Public Contract Code as those requirements
apply to the use of contractual claims processing services by the
state fiscal intermediary.
  SEC. 16.  Section 12693.43 of the Insurance Code is amended to
read:
   12693.43.  (a) Applicants applying to the purchasing pool shall
agree to pay family contributions, unless the applicant has a family
contribution sponsor.  Family contribution amounts consist of the
following two components:
   (1) The flat fees described in subdivision (b) or (d).
   (2) Any amounts that are charged to the program by participating
health, dental, and vision plans selected by the applicant that
exceed the cost to the program of the highest cost Family Value
Package in a given geographic area.
   (b) In each geographic area the board shall designate one or more
Family Value Packages for which the required total family
contribution is:
   (1) Seven dollars ($7) per child with a maximum required
contribution of fourteen dollars ($14) per month per family for
applicants with annual household incomes up to and including 150
percent of the federal poverty level.
   (2) Nine dollars ($9) per child with a maximum required
contribution of twenty-seven dollars ($27) per month per family for
applicants with annual household incomes greater than 150 percent and
up to and including 200 percent of the federal poverty level.
   (c) Combinations of health, dental, and vision plans that are more
expensive to the program than the highest cost Family Value Package
may be offered to and selected by applicants.  However, the cost to
the program of those combinations that exceeds the price to the
program of the highest cost Family Value Package shall be paid by the
applicant as part of the family contribution.
   (d) The board shall provide a family contribution discount to
those applicants who select the health plan in a geographic area
which has been designated as the Community Provider Plan.  The
discount shall reduce the portion of the family contribution
described in subdivision (b) to the following:
   (1) A family contribution of four dollars ($4) per child with a
maximum required contribution of eight dollars ($8) per month per
family for applicants with annual household incomes up to and
including 150 percent of the federal poverty level.
   (2) Six dollars ($6) per child with a maximum required
contribution of eighteen dollars ($18) per month per family for
applicants with annual household incomes greater than 150 percent and
up to and including 200 percent of the federal poverty level.
   (e) Applicants, but not family contribution sponsors, who pay
three months of required family contributions in advance shall
receive the fourth consecutive month of coverage with no family
contribution required.
   (f) It is the intent of the Legislature that the family
contribution amounts described in this section comply with the
premium cost sharing limits contained in Section 2103 of Title XXI of
the Social Security Act.  If the amounts described in subdivision
(a) are not approved by the federal government, the board may adjust
these amounts to the extent required to achieve approval of the state
plan.
  SEC. 17.  Section 12693.62 of the Insurance Code is amended to
read:
   12693.62.  Notwithstanding any other provision of law, for a
subscriber who is determined by the California Children's Services
Program to be eligible for benefits under the program pursuant to
Article 5 (commencing with Section 123800) of Chapter 3 of Part 2 of
Division 106 of the Health and Safety Code, a participating plan
shall not be responsible for the provision of, or payment for, the
particular services authorized by the California Children's Services
Program for the particular subscriber for the treatment of a
California Children's Services Program eligible medical condition.
Participating plans shall refer a child who they reasonably suspect
of having a medical condition that is eligible for services under the
California Children's Services Program to the California Children's
Services Program.  The California Children's Services Program shall
provide case management and authorization of services if the child is
found to be medically eligible for the California Children's
Services Program.  Diagnosis and treatment services that are
authorized by the California Children's Services Program shall be
performed by paneled providers for that program and approved special
care centers of that program in accordance with treatment plans
approved by the California Children's Services Program.  All other
services provided under the participating plan shall be available to
the subscriber.
  SEC. 18.  Section 12693.69 is added to the Insurance Code, to read:

   12693.69.  A child enrolled in the Healthy Families Program who
has a medical condition that is eligible for services pursuant to the
California Children's Services Program, and whose family is not
financially eligible for the California Children's Services Program,
shall have the medically necessary treatment services for their
California Children's Services Program eligible medical condition
authorized and paid for by the California Children's Services
Program.  County expenditures for the payment of services for the
child shall be waived and these expenditures shall be paid for by the
state from Title XXI funds that are applicable and state general
funds.
  SEC. 19.  Section 12693.70 of the Insurance Code is amended to
read:
   12693.70.  To be eligible to participate in the program, an
applicant shall meet all of the following requirements:
   (a) Be an applicant applying on behalf of an eligible child, which
means a child who is all of the following:
   (1) Less than 19 years of age.  An application may be made on
behalf of a child not yet born up to three months prior to the
expected date of delivery.  Coverage shall begin as soon as
administratively feasible, as determined by the board, after the
board receives notification of the birth. However, no child less than
12 months of age shall be eligible for coverage until 90 days after
the enactment of the Budget Act of 1999.
   (2) Not eligible for no-cost full-scope Medi-Cal or Medicare at
the time of application.
   (3) In compliance with Sections 12693.71 and 12693.72.
   (4) A child who meets citizenship and immigration status
requirements that are applicable to persons participating in the
program established by Title XXI of the Social Security Act, except
as specified in Section 12693.76.
   (5) A resident of the State of California pursuant to Section 244
of the Government Code; or, if not a resident pursuant to Section 244
of the Government Code, is physically present in California and
entered the state with a job commitment or to seek employment,
whether or not employed at the time of application to or after
acceptance in, the program.
   (6) (A) In a family with an annual or monthly household income
equal to or less than 200 percent of the federal poverty level.
   (B) All income over 200 percent of the federal poverty level but
less than or equal to 250 percent of the federal poverty level shall
be disregarded in calculating annual or monthly household income.
   (C) In a family with an annual or monthly household income greater
than 250 percent of the federal poverty level, any income deduction
that is applicable to a child under Medi-Cal shall be applied in
determining the annual or monthly household income.  If the income
deductions reduce the annual or monthly household income to 250
percent or less of the federal poverty level, subparagraph (B) shall
be applied.
   (b) If the applicant is applying for the purchasing pool, and does
not have a family contribution sponsor the applicant shall pay the
first month's family contribution and agree to remain in the program
for six months, unless other coverage is obtained and proof of the
coverage is provided to the program.
   (c) An applicant shall enroll all of the applicant's eligible
children in the program.
  SEC. 20.  Section 12693.73 of the Insurance Code is amended to
read:
   12693.73.  Notwithstanding any other provision of law, children
excluded from coverage under Title XXI of the Social Security Act are
not eligible for coverage under the program, except as specified in
Section 12693.76.
  SEC. 21.  Section 12693.76 is added to the Insurance Code, to read:

   12693.76.  Notwithstanding any other provision of law, a child who
is a qualified alien as defined in Section 1641 of Title 8 of the
United States Code Annotated shall not be determined ineligible
solely on the basis of his or her date of entry into the United
States.  For the 1999-2000 fiscal year, these children shall be
allowed to participate in the Healthy Families Program for a period
of 12 months from the effective date that eligibility is established,
whether or not federal financial participation is available for
services provided to them.  For subsequent fiscal years, these
children may only participate in the Healthy Families Program upon
the state receiving federal matching funds for them under the
program.
  SEC. 22.  Section 12693.91 of the Insurance Code is amended to
read:
   12693.91.  (a) The State Department of Health Services, in
conjunction with the Managed Risk Medical Insurance Board, the County
Medical Services Program board, and the Rural Health Policy Council,
may develop and administer up to five demonstration projects in
rural areas that are likely to contain a significant level of
uninsured children, including seasonal and migratory worker
dependents.  In addition to any other funds provided pursuant to this
section the grants for demonstration projects may include funds
pursuant to subdivision (d).
   (b) The purpose of the demonstration projects shall be to fund
rural collaborative health care networks to alleviate unique problems
of access to health care in rural areas.
   (c) The State Department of Health Services, in conjunction with
the Managed Risk Medical Insurance Board and Rural Health Policy
Council, shall establish the criteria and standards for eligibility
to be used in requests for proposals or requests for application, the
application review process, determining the maximum amount and
number of grants to be awarded, preference and priority of projects,
and compliance monitoring after receiving comment from the public.
   (d) The grants may include funds for purchasing equipment, making
capital expenditures, and providing infrastructure, including, but
not limited to, salaries and payment of leaseholds.  The funds under
this subdivision may only be awarded to qualified eligible health
care entities as determined by the State Department of Health
Services.  Title to any equipment or capital improvement purchased or
acquired with grant funds shall vest in the grantee for the public
good and not the state.  Capital expenditures shall not include the
acquisition of land.  Notwithstanding subdivision (e), this
subdivision shall be implemented only when funds are appropriated in
the annual Budget Act or another statute to fund the cost of
implementing this subdivision.
   (e) This section shall only become operative upon federal approval
of the state plan or subsequent amendments for the program and
approval of federal financial participation.
   (f) This section shall become inoperative on July 1, 2003.
  SEC. 23.  Section 12963.96 of the Insurance Code is amended and
renumbered to read:
   12693.96. (a) There is hereby created in the State Treasury the
Healthy Families Fund which is, notwithstanding Section 13340 of the
Government Code, continuously appropriated to the board for the
purposes specified in this part.
   (b) The board shall authorize the expenditure from the fund of any
state funds, federal funds, or family contributions deposited into
the fund.  This shall include the authority for the board to
authorize the State Department of Health Services to transfer funds
appropriated to the department for the program to the Healthy
Families Fund, and to also deposit those funds in, and to disburse
those funds from, the Healthy Families Fund.
   (c) Notwithstanding any other provision of law, this part shall be
implemented only if, and to the extent that, as provided under Title
XXI of the Social Security Act, federal financial participation is
available and state plan approval is obtained, except as specified in
Section 12693.76.
   (d) Nothing in this part is intended to establish an entitlement
for individual coverage.
  SEC. 23.5.  Section 17273 of the Revenue and Taxation Code is
amended to read:
   17273.  For each taxable year beginning on or after January 1,
1999, Section 162(l)(1) of the Internal Revenue Code, relating to
applicable percentage, is modified to provide that Section 2002 of
the Tax and Trade Relief Extension Act of 1998 (P.L. 105-277),
relating to phase in of a 100-percent deduction for health insurance,
shall apply.
  SEC. 24.  Section 4441.5 is added to the Welfare and Institutions
Code, to read:
   4441.5.  The State Department of Developmental Services shall
develop policies and procedures, by no later than 30 days following
the effective date of the Budget Act of 1999, at each developmental
center, to notify appropriate law enforcement agencies in the event
of a forensic client walkaway or escape.  Local law enforcement
agencies, including local police and county sheriff's departments,
shall review the policies and procedures prior to final
implementation by the department.
  SEC. 25.  Section 4640.6 of the Welfare and Institutions Code is
amended to read:
   4640.6.  (a) In approving regional center contracts, the
department shall ensure that regional center staffing patterns
demonstrate that direct service coordination are the highest
priority.
   (b) Contracts between the department and regional centers shall
require that regional centers implement an emergency response system
that ensures that a regional center staff person will respond to a
consumer, or individual acting on behalf of a consumer, within two
hours of the time an emergency call is placed.  This emergency
response system shall be operational 24 hours per day, 365 days per
year.
   (c) Contracts between the department and regional centers shall
require regional centers to have service coordinator-to-consumer
ratios, as follows:
   (1) An average service coordinator to consumer ratio of one to 62
for all consumers who have not moved from the developmental centers
to the community since April 14, 1993.  In no case shall a service
coordinator for these consumers have an assigned caseload in excess
of 79 consumers for more than 60 days.
   (2) An average service coordinator-to-consumer ratio of one to 45
for all consumers who have moved from a developmental center to the
community since April 14, 1993.  In no case shall a service
coordinator for these consumers have an assigned caseload in excess
of 59 consumers for more than 60 days.
   (d) For purposes of this section, "service coordinator" means a
regional center employee whose primary responsibility includes
preparing, implementing, and monitoring consumers' individual program
plans, securing and coordinating consumer services and supports, and
providing placement and monitoring activities.
   (e) By December 15, 1999, the department shall make
recommendations to the Legislature and the Governor regarding the
core staffing formula used to allocate operations funding to regional
centers.  These recommendations shall include consideration of, and
public comments related to, the Regional Center Core Staffing Study,
and shall include, but not be limited to, all of the following:
   (1) Salary and wage levels for positions deemed necessary to
retain and maintain qualified staff.
   (2) Regional center staff positions that should be mandated.
   (3) Staffing ratios necessary to meet the requirements of this
chapter, including a service coordinator-to-consumer ratio necessary
to appropriately meet the needs of consumers who are younger than
three years of age and their families.
         (4) Funding methodologies.
   (5) Indicate the impact to staffing ratios implemented pursuant to
subdivision (c).
   (f) In order to ensure that caseload ratios are maintained
pursuant to this section, each regional center shall provide service
coordinator caseload data to the department in September and March of
each fiscal year, commencing in the 1999-2000 fiscal year.  The data
shall be submitted in a format prescribed by the department.  Within
30 days of receipt of data submitted pursuant to this subdivision,
the department shall make a summary of the data available to the
public upon request.  The department shall verify the accuracy of the
data when conducting regional center fiscal audits.  Data submitted
by regional centers pursuant to this subdivision shall:
   (1) Only include data on service coordinator positions as defined
in subdivision (d).  Regional centers shall identify the number of
positions that perform service coordinator duties on less than a
fulltime basis.  Staffing ratios reported pursuant to this
subdivision shall reflect the appropriate proportionality of these
staff to consumers served.
   (2) Be reported separately for service coordinators whose caseload
primarily includes any of the following:
   (A) Consumers who are three years of age and older and who have
not moved from the developmental center to the community since April
14, 1993.
   (B) Consumers who have moved from a developmental center to the
community since April 14, 1993.
   (C) Consumers who are younger than three years of age.
   (3) Not include positions that are vacant for more than 60 days.
   (g) The department shall provide technical assistance and require
a plan of correction for any regional center that, for two
consecutive reporting periods, fails to maintain service coordinator
caseload ratios required by this section or otherwise demonstrates an
inability to maintain appropriate staffing patterns pursuant to this
section.  Plans of correction shall be developed following input
from the local area board, local organizations representing
consumers, family members, regional center employees, including
recognized labor organizations, and service providers, and other
interested parties.
   (h) Contracts between the department and regional center shall
require the regional center to have, or contract for, all of the
following areas:
   (1) Criminal justice expertise to assist the regional center in
providing services and support to consumers involved in the criminal
justice system as a victim, defendant, inmate, or parolee.
   (2) Special education expertise to assist the regional center in
providing advocacy and support to families seeking appropriate
educational services from a school district.
   (3) Family support expertise to assist the regional center in
maximizing the effectiveness of support and services provided to
families.
   (4) Housing expertise to assist the regional center in accessing
affordable housing for consumers in independent or supportive living
arrangements.
   (5) Community integration expertise to assist consumers and
families in accessing integrated services and supports and improved
opportunities to participate in community life.
   (6) Quality assurance expertise, to assist the regional center to
provide the necessary coordination and cooperation with the area
board in conducting quality-of-life assessments and coordinate the
regional center quality assurance efforts.
   (7) Each regional center shall employ at least one consumer
advocate who is a person with developmental disabilities.
   (8) Other staffing arrangements related to the delivery of
services that the department determines are necessary to ensure
maximum cost-effectiveness and to ensure that the service needs of
consumers and families are met.
   (i) Any regional center proposing a staffing arrangement that
substantially deviates from the requirements of this section shall
request a waiver from the department.  Prior to granting a waiver,
the department shall require a detailed staffing proposal, including,
but not limited to, how the proposed staffing arrangement will
benefit consumers and families served, and shall demonstrate clear
and convincing support for the proposed staffing arrangement from
constituencies served and impacted, that include, but are not limited
to, consumers, families, providers, advocates, and recognized labor
organizations.  In addition, the regional center shall submit to the
department any written opposition to the proposal from organizations
or individuals, including, but not limited to, consumers, families,
providers, and advocates, including recognized labor organizations.
The department may grant waivers to regional centers that
sufficiently demonstrate that the proposed staffing arrangement is in
the best interest of consumers and families served, complies with
the requirements of this chapter, and does not violate any
contractual requirements.  A waiver shall be approved by the
department for up to 12 months, at which time a regional center may
submit a new request pursuant to this subdivision.
   (j) The requirements of subdivisions (c), (g), and (i) shall not
apply when a regional center is required to develop an expenditure
plan pursuant to Section 4791, and when the expenditure plan
addresses the specific impact of the budget reduction on staffing
requirements and the expenditure plan is approved by the department.

  SEC. 26.  Section 4647 of the Welfare and Institutions Code is
amended to read:
   4647.  (a) Pursuant to Section 4640.7, service coordination shall
include those activities necessary to implement an individual program
plan, including, but not limited to, participation in the individual
program plan process; assurance that the planning team considers all
appropriate options for meeting each individual program plan
objective; securing, through purchasing or by obtaining from generic
agencies or other resources, services and supports specified in the
person's individual program plan; coordination of service and support
programs; collection and dissemination of information; and
monitoring implementation of the plan to ascertain that objectives
have been fulfilled and to assist in revising the plan as necessary.

   (b) The regional center shall assign a service coordinator who
shall be responsible for implementing, overseeing, and monitoring
each individual program plan.  The service coordinator may be an
employee of the regional center or may be a qualified individual or
employee of an agency with whom the regional center has contracted to
provide service coordination services, or persons described in
Section 4647.2.  The regional center shall provide the consumer or,
where appropriate, his or her parents, legal guardian, or conservator
or authorized representative, with written notification of any
permanent change in the assigned service coordinator within 10
business days.  No person shall continue to serve as a service
coordinator for any individual program plan unless there is agreement
by all parties that the person should continue to serve as service
coordinator.
   (c) Where appropriate, a consumer or the consumer's parents or
other family members, legal guardian, or conservator, may perform all
or part of the duties of the service coordinator described in this
section if the regional center director agrees and it is feasible.
   (d) If any person described in subdivision (c) is designated as
the service coordinator, that person shall not deviate from the
agreed-upon program plan and shall provide any reasonable information
and reports required by the regional center director.
   (e) If any person described in subdivision (c) is designated as
the service coordinator, the regional center shall provide ongoing
information and support as necessary, to assist the person to perform
all or part of the duties of service coordinator.
  SEC. 27.  Section 4681.3 of the Welfare and Institutions Code is
amended to read:
   4681.3.  (a) Notwithstanding any other provision of this article,
for the 1996-97 fiscal year, the rate schedule authorized by the
department in operation June 30, 1996, shall be increased based upon
the amount appropriated in the Budget Act of 1996 for that purpose.
The increase shall be applied as a percentage, and the percentage
shall be the same for all providers.
   (b) Notwithstanding any other provision of this article, for the
1997-98 fiscal year, the rate schedule authorized by the department
in operation on June 30, 1997, shall be increased based upon the
amount appropriated in the Budget Act of 1997 for that purpose.  The
increase shall be applied as a percentage, and the percentage shall
be the same for all providers.
   (c) Notwithstanding any other provision of this article, for the
1998-99 fiscal year, the rate schedule authorized by the department
in operation on June 30, 1998, shall be increased commencing July 1,
1998, based upon the amount appropriated in the Budget Act of 1998
for that purpose.  The increase shall be applied as a percentage, and
the percentage shall be the same for all providers.
   (d) Notwithstanding any other provision of this article, for the
1998-99 fiscal year, the rate schedule authorized by the department
in operation on December 31, 1998, shall be increased January 1,
1999, based upon the cost-of-living adjustments in the Supplemental
Security Income/State Supplementary Program for the Aged, Blind, and
Disabled appropriated in the Budget Act of 1998 for that purpose.
The increase shall be applied as a percentage and the percentage
shall be the same for all providers.
   (e) Notwithstanding any other provision of this article, for the
1999-2000 fiscal year, the rate schedule authorized by the department
in operation on June 30, 1999, shall be increased July 1, 1999,
based upon the amount appropriated in the Budget Act of 1999 for that
purpose.  The increase shall be applied as a percentage and the
percentage shall be the same for all providers.
   (f) In addition, commencing January 1, 2000, any funds available
from cost-of-living adjustments in the Supplemental Security
Income/State Supplementary Payment (SSI/SSP) for the 1999-2000 fiscal
year shall be used to further increase the community care facility
rate.  The increase shall be applied as a percentage, and the
percentage shall be the same for all providers.
  SEC. 28.  Section 5701.1 is added to the Welfare and Institutions
Code, to read:
   5701.1.  Notwithstanding Section 5701, the State Department of
Mental Health, in consultation with the California Mental Health
Directors Association, may utilize funding from the Substance Abuse
and Mental Health Services Administration Block Grant, awarded to the
State Department of Mental Health, above the funding level provided
in federal fiscal year 1998, for the development of innovative
programs for identified target populations, upon appropriation by the
Legislature.
  SEC. 29.  Section 6501 is added to the Welfare and Institutions
Code, to read:
   6501.  If a person is charged with a violent felony, as described
in Section 667.5 of the Penal Code, and the individual has been
committed to the State Department of Developmental Services pursuant
to Section 1370.1 of the Penal Code or Section 6500 for placement in
a secure treatment facility, as described in subdivision (e) of
Section 1370.1 of the Penal Code, the department shall give priority
to placing the individual at Porterville Developmental Center prior
to placing the individual at any other developmental center that has
been designated as a secure treatment facility.
  SEC. 30.  Section 14005.30 of the Welfare and Institutions Code is
amended to read:
   14005.30.  (a) (1) To the extent that federal financial
participation is available, Medi-Cal benefits under this chapter
shall be provided to individuals eligible for services under Section
1396u-1 of Title 42 of the United States Code, including any options
under Section 1396u-1(b)(2)(C) made available to and exercised by the
state.
   (2) The department shall exercise its option under Section 1396u-1
(b)(2)(C) of Title 42 of the United States Code to adopt less
restrictive income and resource eligibility standards and
methodologies to the extent necessary to allow all recipients of
benefits under Chapter 2 (commencing with Section 11200) to be
eligible for Medi-Cal under paragraph (1).
   (b) To the extent that federal financial participation is
available, the department shall exercise its option under Section
1396u-1(b)(2)(C) of Title 42 of the United States Code as necessary
to expand eligibility for Medi-Cal under subdivision (a) by,
commencing August 1, 1999, exempting all resources. If federal
financial participation is not available to exempt all resources,
then the department shall continue to establish the amount of
countable resources individuals or families are allowed to retain at
the same amount medically needy individuals and families are allowed
to retain, except that a family of one shall be allowed to retain
countable resources in the amount of three thousand dollars ($3,000).

   (c) To the extent federal financial participation is available,
the department shall, commencing March 1, 2000, adopt an income
disregard for applicants equal to the difference between the income
standard under the program adopted pursuant to Section 1931(b) of the
federal Social Security Act (42 U.S.C. Sec. 1396u-1) and the amount
equal to 100 percent of the federal poverty level applicable to the
size of the family.
   (d) Except for the exemption of resources effective as of August
1, 1999, as provided in subdivision (b), subdivision (b) shall be
applied retroactively to January 1, 1998.
   (e) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement, without taking regulatory action,
subdivisions (a) and (b) of this section by means of an all county
letter or similar instruction.  Thereafter, the department shall
adopt regulations in accordance with the requirements of Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code.  Beginning six months after the effective date
of this section, the department shall provide a status report to the
Legislature on a semiannual basis until regulations have been
adopted.
  SEC. 31.  Section 14007.5 of the Welfare and Institutions Code is
amended to read:
   14007.5.  (a) Aliens shall be eligible for Medi-Cal, whether
federally funded or state-funded, only to the same extent as
permitted under federal law and regulations for receipt of federal
financial participation under Title XIX of the federal Social
Security Act, except as otherwise provided in this section and
Section 14007.7.
   (b) In accordance with Section 1903(v)(1) of the federal Social
Security Act (42 U.S.C. Sec. 1396b(v)(1)), an alien shall only be
eligible for the full scope of Medi-Cal benefits, if the alien has
been lawfully admitted for permanent residence, or is otherwise
permanently residing in the United States under color of law.
   For purposes of this section, aliens "permanently residing in the
United States under color of law" shall be interpreted to include all
aliens residing in the United States with the knowledge and
permission of the United States Immigration and Naturalization
Service and whose departure the United States Immigration and
Naturalization Service does not contemplate enforcing and with
respect to whom federal financial participation is available under
Title XIX of the federal Social Security Act.
   (c) Any alien whose immigration status has been adjusted either to
lawful temporary resident or lawful permanent resident in accordance
with the provisions of Section 210, 210A, or 245A of the federal
Immigration and Nationality Act, and who meets all other eligibility
requirements, shall be eligible only for care and services under
Medi-Cal for which the alien is not disqualified pursuant to those
sections of the federal act.
   (d) Any alien who is otherwise eligible for Medi-Cal services, but
who does not meet the requirements under subdivision (b) or (c),
shall only be eligible for care and services that are necessary for
the treatment of an emergency medical condition and medical care
directly related to the emergency, as defined in federal law.  For
purposes of this section, the term "emergency medical condition"
means a medical condition manifesting itself by acute symptoms of
sufficient severity, including severe pain, such that the absence of
immediate medical attention could reasonably be expected to result in
any of the following:
   (1) Placing the patient's health in serious jeopardy.
   (2) Serious impairment to bodily functions.
   (3) Serious dysfunction to any bodily organ or part.  It is the
intent of this section to entitle eligible individuals to inpatient
and outpatient services that are necessary for the treatment of  the
emergency medical condition in the same manner as administered  by
the department through regulations and provisions of federal law.
   (e) Pursuant to Section 14001.2, each county department shall
require that each applicant for, or beneficiary of, Medi-Cal,
including a child, shall provide his or her social security number
account number, or numbers, if he or she has more than one social
security number.
   (f) (1) In order to be eligible for benefits under subdivision (b)
or (c), an alien applicant or beneficiary shall present alien
registration documentation or other proof of satisfactory immigration
status from the United States Immigration and Naturalization
Service.
   (2) Any alien who meets all other program requirements but who
lacks documentation of alien registration or other proof of
satisfactory immigration status shall be provided a reasonable
opportunity to submit the evidence.  For purposes of this paragraph,
"reasonable opportunity" means 30 days or the time it actually takes
the county to process the Medi-Cal application, whichever is longer.

   (3) During the reasonable opportunity period under paragraph (2),
the county department shall process the applicant's application for
medical assistance in a manner that conforms to its normal processing
procedures and timeframes.
   (g) (1) The county department shall grant only the Medi-Cal
benefits set forth in subdivision (d) of this section or in Section
14007.7 to any individual who, after 30 calendar days or the time it
actually takes the county to process the Medi-Cal application,
whichever is longer, has failed to submit documents constituting
reasonable evidence indicating a satisfactory immigration status for
Medi-Cal purposes, or who is reported by the United States
Immigration and Naturalization Service to lack a satisfactory
immigration status for Medi-Cal purposes.
   (2) If an alien has been receiving Medi-Cal benefits based on
eligibility established prior to the effective date of this section
and that individual, upon redetermination of eligibility for
benefits, fails to submit documents constituting reasonable evidence
indicating  a satisfactory immigration status for Medi-Cal purposes,
the county department shall discontinue the Medi-Cal benefits, except
for the care and services set forth in subdivision (d) of this
section or in Section 14007.7.  The county department shall provide
adequate notice to the individual of any adverse action and shall
accord the individual an opportunity for a fair hearing if he or she
requests one.
   (h) To the extent permitted by federal law and regulations, an
alien applying for services under subdivisions (b) and (c) shall be
granted eligibility for the scope of services to which he or she
would otherwise be entitled if, at the time the county department
makes the determination about his or her eligibility, the alien meets
either of the following requirements:
   (1) He or she has  not had a reasonable opportunity to submit
documents constituting reasonable evidence indicating satisfactory
immigration status.
   (2) He or she has provided documents constituting reasonable
evidence indicating a satisfactory immigration status, but the county
department has not received timely verification of the alien's
immigration status from the United States Immigration and
Naturalization Service.
   (3) The verification process shall protect the privacy of all
participants.  An alien's immigration status shall be subject to
verification by the United States Immigration and Naturalization
Service, to the extent required for receipt of federal financial
participation in the Medi-Cal program.
   (i) If an alien  does not declare status as a lawful permanent
resident or alien permanently residing under color of law, or as an
alien legalized under Section 210, 210A, or 245A of the federal
Immigration and Nationality Act (P.L. 82-414), Medi-Cal coverage
under subdivision (d) of this section or in Section 14007.7 shall be
provided to the individual if he or she is otherwise eligible.
   (j) If an alien subject to this section is not fluent in English,
the county department shall provide an understandable explanation of
the requirements of this section in a language in which the alien is
fluent.
   (k) Aliens who were receiving long-term care or renal dialysis
services (1) on the day prior to the effective date of the amendment
to paragraph (1) of subdivision (f) of Section 1 of Chapter 1441 of
the Statutes of 1988 at the 1991-92 Regular Session of the
Legislature and (2) under the authority of paragraph (1) of
subdivision (f) of Section 1 of Chapter 1441 of the Statutes of 1988
as it read on June 30, 1992, shall continue to receive these
services.  The authority for continuation of long-term care or renal
dialysis services in this subdivision shall not apply to any person
whose long-term care or renal dialysis services end for any reason
after the effective date of the amendment described in this
subdivision.
  SEC. 32.  Section 14007.65 is added to the Welfare and Institutions
Code, to read:
   14007.65.  (a) Any alien who is otherwise eligible for Medi-Cal
services, but who does not meet the requirements under subdivision
(b) or (c) of Section 14007.5, shall be eligible for long-term care
services.
   (b) Subdivision (a) is intended to reconfirm, and be declaratory
of, existing law.
  SEC. 33.  Section 14007.7 is added to the Welfare and Institutions
Code, to read:
   14007.7.  Any alien who is otherwise eligible for Medi-Cal
services, but who does not meet the requirements under subdivision
(b) or (c) of Section 14007.5, shall be eligible for medically
necessary pregnancy-related services.
  SEC. 34.  Section 14008.85 is added to the Welfare and Institutions
Code, to read:
   14008.85.  (a) To the extent federal financial participation is
available, a parent who is the principal wage earner shall be
considered an unemployed parent for purposes of establishing
eligibility based upon deprivation of a child where any of the
following applies:
   (1) The parent works less than 100 hours per month as determined
pursuant to the rules of the Aid to Families with Dependent Children
program as it existed on July 16, 1996, including the rule allowing a
temporary excess of hours due to intermittent work.
   (2) The total net nonexempt earned income for the family is not
more than 100 percent of the federal poverty level as most recently
calculated by the federal government.  The department may adopt
additional deductions to be taken from a family's income.
   (3) The parent is considered unemployed under the terms of an
existing federal waiver of the 100-hour rule for recipients under the
program established by Section 1931(b) of the federal Social
Security Act (42 U.S.C.  Sec. 1396u-1).
   (b) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this section by means of an all county
letter or similar instruction without taking regulatory action.
Thereafter, the department shall adopt regulations in accordance with
the requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.
   (c) This section shall become operative March 1, 2000.
  SEC. 35.  Section 14011.15 is added to the Welfare and Institutions
Code, to read:
   14011.15.  (a) The department shall, not later than July 1, 2000,
create and implement a simplified application package for children,
families, and adults applying for Medi-Cal benefits.  This simplified
application package shall include a simplified supplemental resource
form.
   (b) In developing the application package described in subdivision
(a), the department shall seek input from persons with expertise,
including beneficiary representatives, counties, and beneficiaries.
   (c) The department shall allow an applicant to apply for benefits
by mailing in the simplified application package.
   (d) The simplified application package shall utilize at a minimum,
all of the following documentation standards:
   (1) Proof of income shall be documented by the most recent paystub
or a copy of the last year's federal income tax return.
   (2) Self-declaration of pregnancy.
   (3) A simplified supplemental resource form, if applicable.
   (e) The department shall not require an applicant who submits a
simplified application pursuant to this section to complete a
face-to-face interview, except for good cause, a suspicion of fraud,
or in order to complete the application process.  A county shall
conduct random monitoring of the mail-in application process to
ensure appropriate enrollment.  Every application package shall
contain a notification of the applicant's right to complete a
face-to-face interview.
   (f) Not later than July 1, 2000, the department shall revise the
quarterly reporting form to be as simple as possible to complete.
   (g) The department shall implement this section only to the extent
that its provisions are not in violation of the requirements of
federal law, and only to the extent that federal financial
participation is not jeopardized.
   (h) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this section by means of an all county
letter or similar instruction without taking regulatory action.
Thereafter, the department shall adopt regulations in accordance with
the requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.

           SEC. 36.  Section 14018.5 is added to the Welfare and
Institutions Code, to read:
   14018.5.  Notwithstanding any other provision of law, Section 3275
of the Civil Code does not apply to Medi-Cal reimbursement or prior
authorization.
  SEC. 37.  Article 1.3 (commencing with Section 14043) is added to
Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions
Code, to read:

      Article 1.3.  Provider Enrollment

   14043.  In order to ensure the proper and efficient administration
of the Medi-Cal program, every applicant, as defined in subdivision
(b) of Section 14043.1, and every provider, as defined in subdivision
(e) of Section 14043.1, shall be subject to the requirements of this
article.
   14043.1.  As used in this article:
   (a) "Abuse" means either of the following:
   (1) Practices that are inconsistent with sound fiscal or business
practices and result in unnecessary cost to the Medicare program, the
Medi-Cal program, another state's medicaid program, or other health
care programs operated, or financed in whole or in part, by the
federal government or any state or local agency in this state or any
other state.
   (2) Practices that are inconsistent with sound medical practices
and result in reimbursement by the Medi-Cal program or other health
care programs operated, or financed in whole or in part, by the
federal government or any state or local agency in this state or any
other state, for services that are unnecessary or for substandard
items or services that fail to meet professionally recognized
standards for health care.
   (b) "Applicant" means any individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, employees, or agents thereof, that applies to the
department for enrollment as a provider in the Medi-Cal program.
   (c) "Convicted" means any of the following:
   (1) A judgment of conviction has been entered against an
individual or entity by a federal, state, or local court, regardless
of whether there is a posttrial motion or an appeal pending or the
judgment of conviction or other record relating to the criminal
conduct has been expunged or otherwise removed.
   (2) A federal, state, or local court has made a finding of guilt
against an individual or entity.
   (3) A federal, state, or local court has accepted a plea of guilty
or nolo contendere by an individual or entity.
   (4) An individual or entity has entered into participation in a
first offender, deferred adjudication, or other program or
arrangement where judgment of conviction has been withheld.
   (d) "Fraud" means an intentional deception or misrepresentation
made by a person with the knowledge that the deception could result
in some unauthorized benefit to himself or herself or some other
person.  It includes any act that constitutes fraud under applicable
federal or state law.
   (e) "Provider" means any individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, employees, or agents thereof, that provides services,
goods, supplies, or merchandise, directly or indirectly, to a
Medi-Cal beneficiary and that has been enrolled in the Medi-Cal
program.
   (f) "Professionally recognized standards of health care" means
statewide or national standards of care, whether in writing or not,
that professional peers of the individual or entity whose provision
of care is an issue, recognize as applying to those peers practicing
or providing care within a state.  When the United States Department
of Health and Human Services has declared a treatment modality not to
be safe and effective, practitioners that employ that treatment
modality shall be deemed not to meet professionally recognized
standards of health care.  This definition shall not be construed to
mean that all other treatments meet professionally recognized
standards of care.
   (g) "Unnecessary or substandard items or services" means those
that are either of the following:
   (1) Substantially in excess of the provider's usual charges or
costs for the items or services.
   (2) Furnished, or caused to be furnished, to patients, whether or
not covered by Medicare, medicaid, or any of the state health care
programs to which the definitions of applicant and provider apply,
and which are substantially in excess of the patient's needs, or of a
quality that fails to meet professionally recognized standards of
health care.  The department's determination that the items or
services furnished were excessive or of unacceptable quality shall be
made on the basis of information, including sanction reports, from
the following sources:
   (A) The professional review organization for the area served by
the individual or entity.
   (B) State or local licensing or certification authorities.
   (C) Fiscal agents or contractors, or private insurance companies.

   (D) State or local professional societies.
   (E) Any other sources deemed appropriate by the department.
   14043.15. The department may adopt regulations for certification
of each applicant and each provider in the Medi-Cal program.  No
certification shall be required for clinics licensed under Section
1204 of the Health and Safety Code, clinics exempt from licensure
under Section 1206 of the Health and Safety Code, health facilities
licensed under Chapter 2 (commencing with Section 1250) of Division 2
of the Health and Safety Code, or natural persons licensed or
certified under Division 2 (commencing with Section 500) of the
Business and Professions Code, the Osteopathic Initiative Act or the
Chiropractic Intiative Act.
   14043.2.  (a) Whether or not regulations for certification are
adopted under Section 14043.15, in order to be enrolled as a
provider, or for enrollment as a provider to continue, an applicant
or provider may be required to sign a provider agreement and shall
disclose all information as required in federal medicaid regulations
and any other information required by the department.  The director
may designate the form of a provider agreement by provider type.
Failure to disclose the required information, or the disclosure of
false information, shall, prior to any hearing, result in denial of
the application for enrollment or shall make the provider subject to
temporary suspension, which shall include temporary deactivation of
all provider numbers used by the provider to obtain reimbursement
from the Medi-Cal program.
   (b) The director shall notify the provider of the temporary
suspension and deactivation of the provider's Medi-Cal provider
number or numbers and the effective date thereof.  Notwithstanding
Section 100171 of the Health and Safety Code and Section 14123,
proceedings after the imposition of sanctions provided for in
subdivision (a) shall be in accordance with Section 14043.65.
   14043.25.  (a) The application form for enrollment, the provider
agreement, and all attachments or changes to either, shall be signed
under penalty of perjury.
   (b) The department may require that the application form for
enrollment, the provider agreement, and all attachments or changes to
either, submitted by an applicant or provider licensed pursuant to
Division 2 (commencing with Section 500) of the Business and
Professions Code, the Osteopathic Initiative Act, or the Chiropractic
Initiative Act, be notarized.
   (c) Application forms for enrollment, provider agreements, and all
attachments or changes to either, submitted by an applicant or
provider not subject to subdivision (b) shall be notarized.
   14043.3.  A provider shall be required to reimburse those Medi-Cal
funds received during any period for which material information was
not reported, or reported falsely, to the department.
   14043.35.  Sections 14043.2, 14043.25, and 14043.3 shall not limit
the authority granted the director and the rights granted providers
in Section 14123.  Action taken under the authority granted in
Section 14123 shall be taken in accordance with that section.
   14043.36.  (a) The department shall not enroll any applicant that
has been convicted of any felony or misdemeanor involving fraud or
abuse in any government program, that has been found guilty of fraud
or abuse in any civil proceeding, or that has entered into a
settlement in lieu of conviction for fraud or abuse, within the
previous five years.  In addition, the department may deny enrollment
to any applicant that, at the time of application, is under
investigation pursuant to Subpart A (commencing with Section 455.12)
of Part 455 of Title 42 of the Code of Federal Regulations.  The
department shall not deny enrollment to an otherwise qualified
applicant whose felony or misdemeanor charges did not result in a
conviction solely on the basis of the prior charges.  If it is
discovered that a provider is under investigation for fraud or abuse,
that provider shall be subject to temporary suspension, which shall
include temporary deactivation of all provider numbers used by the
provider to obtain reimbursement from the Medi-Cal program.
   (b) The director shall notify the provider of the temporary
suspension and deactivation of the provider's Medi-Cal provider
number or numbers and the effective date thereof.  Notwithstanding
Section 100171 of the Health and Safety Code, proceedings after the
imposition of sanctions provided for in subdivision (a) shall be in
accordance with Section 14043.65.
   14043.37.  The department may complete a background check on
applicants for the purpose of verifying the accuracy of the
information provided in the application and in order to prevent fraud
and abuse.  The background check may include, but not be limited to,
the following:
   (a) Onsite inspection prior to enrollment.
   (b) Review of business records.
   (c) Data searches.
   14043.4.  If discrepancies are found to exist during the
preenrollment period, the department may conduct additional
inspections prior to enrollment.  Failure to remediate discrepancies
as prescribed by the director may result in denial of the application
for enrollment.
   14043.45.  Notwithstanding the adoption of the Standardized
National Application form and the National Provider Identifier by the
federal government, a provider may be issued a unique identification
number or numbers, as prescribed by the director.
   14043.5.  Subject to Article 4 (commencing with Section 19130) of
Chapter 5 of Division 5 of Title 2 of the Government Code, the
department may enter into contracts to secure consultant services or
information technology including, but not limited to, software, data,
or analytical techniques or methodologies for the purpose of fraud
or abuse detection and prevention.  Contracts under this section
shall be exempt from the Public Contract Code.
   14043.55.  The department may implement a 180-day moratorium on
the enrollment of providers in a specific provider of service
category, on a statewide basis or within a geographic area, except
that no moratorium shall be implemented on the enrollment of
providers who are licensed as clinics under Section 1204 of the
Health and Safety Code, health facilities under Chapter 2 (commencing
with Section 1250) of the Health and Safety Code, clinics exempt
from licensure under Section 1206 of the Health and Safety Code, or
natural persons licensed or certified under Division 2 (commencing
with Section 500) of the Business and Professions Code, the
Osteopathic Initiative Act, or the Chiropractic Initiative Act, when
the director determines this action is necessary to safeguard public
funds or to maintain the fiscal integrity of the program.  This
moratorium may be extended or repeated when the director determines
this action is necessary to safeguard public funds or to maintain the
fiscal integrity of the program.  The authority granted in this
section shall not be interpreted as a limitation on the authority
granted to the department in Section 14105.3.
   14043.6.  The department shall automatically suspend, as a
provider in the Medi-Cal program, any individual who, or any entity
that, has a license, certificate, or other approval to provide health
care, which is revoked or suspended by a federal, California, or
another state's licensing, certification, or approval authority, has
otherwise lost that license, certificate, or approval, or has
surrendered that license, certificate, or approval while a
disciplinary hearing on that license, certificate, or approval was
pending.  The automatic suspension shall be effective on the date
that the license, certificate, or approval was revoked, lost, or
surrendered.
   14043.65.  Notwithstanding any other provision of law, any
applicant whose application for enrollment as a provider or whose
certification is denied, or any provider who is denied continued
enrollment or certification, who has been temporarily suspended, or
who has had payments withheld, who has had one or more provider
numbers used to obtain reimbursement from the Medi-Cal program
deactivated, pursuant to Section 14107.11, may appeal this action by
submitting a written appeal, including any supporting evidence, to
the director.  Where the appeal is of a withholding of payment
pursuant to Section 14107.11, the appeal to the director shall be
limited to the issue of the reliability of the evidence supporting
the withhold and shall not encompass fraud or abuse.  The appeal
procedure shall not include a formal administrative hearing under the
Administrative Procedure Act and shall not result in reactivation of
any deactivated provider numbers during appeal.  An applicant or
provider that appeals an action taken pursuant to this article shall
submit all pertinent documents and all other relevant evidence to the
director or to the director's designee within 60 days of the date of
notification of the department's action.  The director or the
director's designee shall review all of the relevant materials
submitted and shall issue a decision within 90 days of the receipt of
the evidence.  The decision may provide that the action taken should
be upheld, continued, or reversed, in whole or in part.  The
decision of the director or the director's designee shall be final.
Any further appeal shall be required to be filed in accordance with
Section 1085 of the Civil Code.
   14043.7.  (a) The department may make unannounced visits to any
applicant or to any provider for the purpose of determining whether
enrollment, continued enrollment, or certification is warranted, or
as necessary for the administration of the Medi-Cal program.  At the
time of the visit, the applicant or provider shall be required to
demonstrate an established place of business appropriate and adequate
for the services billed or claimed to the Medi-Cal program, as
relevant to his or her scope of practice, as indicated by, but not
limited to, the following:
   (1) Being open and available to the general public.
   (2) Having regularly established and posted business hours.
   (3) Having adequate supplies in stock on the premises.
   (4) Meeting all local laws and ordinances regarding business
licensing and operations.
   (5) Having the necessary equipment and facilities to carry out
day-to-day business for his or her practice.
   (b) An unannounced visit pursuant to subdivision (a) shall be
prohibited with respect to clinics licensed under Section 1204 of the
Health and Safety Code, clinics exempt from licensure under Section
1206 of the Health and Safety Code, health facilities licensed under
Chapter 2 (commencing with Section 1250) of Division 2 of the Health
and Safety Code, and natural persons licensed or certified under
Division 2 (commencing with Section 500) of the Business and
Professions Code, the Osteopathic Initiative Act, or the Chiropractic
Initiative Act, unless the department has reason to believe that the
provider will defraud or abuse the Medi-Cal program or lacks the
organizational or administrative capacity to provide services under
the program.
   (c) Failure to remediate discrepancies that are discovered as a
result of an unannounced visit to a provider shall, prior to hearing,
make the provider subject to temporary suspension, which shall
include temporary deactivation of all provider numbers used by the
provider to obtain reimbursement from the Medi-Cal program.  The
director shall notify the provider of the temporary suspension and
deactivation of provider numbers, and the effective date thereof.
Notwithstanding Section 100171 of the Health and Safety Code,
proceedings after the imposition of sanctions in this paragraph shall
be in accordance with Section 14043.65.
   14043.75.  The director may, by regulation, adopt additional
measures to prevent or curtail fraud and abuse.
  SEC. 38.  Section 14053 of the Welfare and Institutions Code is
amended to read:
   14053.  The term "health care services" means the benefits set
forth in Article 4 (commencing with Section 14131) of this chapter
and in Section 14021.  The term includes inpatient hospital services
for any individual under 21 years of age in an institution for mental
diseases.  Any individual under 21 years of age receiving inpatient
psychiatric hospital services immediately preceding the date on which
he or she attains age 21 may continue to receive these services
until he or she attains age 22.  The term also includes early and
periodic screening, diagnosis, and treatment for any individual under
21 years of age.
   The term "health care services" does not include, except to the
extent permitted by federal law, any of the following:
   (a) Care or services for any individual who is an inmate of an
institution (except as a patient in a medical institution).
   (b) Care or services for any individual who has not attained 65
years of age and who is a patient in an institution for tuberculosis.

   (c) Inpatient services provided to individuals 21 to 64 years of
age, inclusive, in an institution for mental diseases operating under
a consolidated license with a general acute care hospital pursuant
to Section 1250.8 of the Health and Safety Code, unless federal
financial participation is available for such inpatient services.
  SEC. 39.  Section 14053.1 is added to the Welfare and Institutions
Code, to read:
   14053.1.  Notwithstanding Section 14053, ancillary outpatient
services, pursuant to Section 14132, for any eligible individual who
is 21 years of age or over, and has not attained 65 years of age and
who is a patient in an institution for mental diseases shall be
covered regardless of the availability of federal financial
participation.
  SEC. 40.  Section 14067 of the Welfare and Institutions Code is
amended to read:
   14067.  (a) The department, in conjunction with the Managed Risk
Medical Insurance Board, shall develop and conduct a community
outreach and education campaign to help families learn about, and
apply for, Medi-Cal and the Healthy Families Program of the Managed
Risk Medical Insurance Board, subject to the requirements of federal
law.  In conducting this campaign, the department may seek input
from, and contract with, various entities and programs that serve
children, including, but not limited to, the State Department of
Education, counties, Women, Infants, and Children program agencies,
Head Start and Healthy Start programs, and community-based
organizations that deal with potentially eligible families and
children to assist in the outreach, education, and application
completion process.
   (b) The outreach and education campaign shall be established and
implemented as of February 18, 1998.  An annual outreach plan shall
be submitted to the Legislature by April 1 for each fiscal year.  The
plan shall address both the Medi-Cal program for children and the
Healthy Families Program and, at a minimum, shall include the
following:
   (1) Specific milestones and objectives to be completed for the
upcoming year and their anticipated cost.
   (2) A general description of each strategy or method to be used
for outreach.
   (3) Geographic areas and special populations to be targeted, if
any, and why the special targeting is needed.
   (4) Coordination with other state or county education and outreach
efforts.
   (5) The results of previous year outreach efforts.
   (c) In implementing this section, the department may amend any
existing or future media outreach campaign contract that it has
entered into pursuant to Section 14148.5.  Notwithstanding any other
provision of law, any such contract entered into, or amended, as
required to implement this section, shall be exempt from the approval
of the Director of General Services and from the provisions of the
Public Contract Code.
   (d) (1) The department, in conjunction with the Managed Risk
Medical Insurance Board, shall award contracts to community-based
organizations to help families learn about, and enroll in, the
Medi-Cal program and Healthy Families Program, and other health care
programs for low-income children.  Funding shall be contingent upon
appropriation in the annual Budget Act.
   (2) Contracts for these outreach and enrollment projects shall be
awarded based on, but not limited to, all of the following criteria:

   (A) Capacity to reach populations or geographic areas with
disproportionately low enrollment rates.  If it is not possible to
estimate the number of uninsured children in a geographic area who
are eligible for the Medi-Cal program or the Healthy Families
Program, proxy measures for rates of eligible children may be used.
These measures may include, but are not limited to, the number of
children in families with gross annual household incomes at or below
the federal poverty levels pertinent to the programs.
   (B) Organizational capacity and experience, including, but not
limited to, any of the following:
   (i) Organizational experience in serving low-income families.
   (ii) Ability to work effectively with populations that have
disproportionately low enrollment rates.
   (iii) Organizational experiences in helping families learn about,
and enroll in, the Medi-Cal program and Healthy Families Program.
Organizations that do not have experience helping families learn
about, and enroll in, the Medi-Cal program and Healthy Families
Program shall be eligible only to the extent that they support and
collaborate with the outreach and enrollment activities of entities
with that experience.
   (C) Effectiveness of the outreach and education plan, including,
but not limited to, all of the following:
   (i) Culturally and linguistically appropriate outreach and
education strategies.
   (ii) Strategies to identify and address barriers to enrollment,
such as transportation limitations and community perceptions
regarding the Medi-Cal program and Healthy Families Program.
   (iii) Coordination with other outreach efforts in the community,
including the statewide Healthy Families Program and Medi-Cal program
outreach campaign, the state and federally funded county Medi-Cal
outreach program, and any other Medi-Cal program and Healthy Families
Program outreach projects in the target community.
   (iv) Collaboration with other local organizations that serve
families of eligible children.
   (v) Strategies to ensure that children and families retain
coverage and are informed of options for health coverage and services
when they lose eligibility for a particular program.
   (vi) Plans to inform families about all available health care
programs and services.
  SEC. 41.  Section 14085.7 of the Welfare and Institutions Code is
amended to read:
   14085.7.  (a) The Medi-Cal Medical Education Supplemental Payment
Fund is hereby created in the State Treasury.  Notwithstanding
Section 13340 of the Government Code, the fund shall be continuously
appropriated to, and under the administrative control of, the
department for the purposes specified in this section.  Except as
otherwise limited by this section, the fund shall consist of all of
the following:
   (1) All public moneys transferred by public agencies to the
department for deposit into the fund, as permitted under Section
433.51 of Title 42 of the Code of Federal Regulations or any other
applicable federal medicaid laws.
   (2) All private moneys donated by private individuals or entities
to the department for deposit in the fund as permitted under
applicable federal medicaid laws.
   (3) Any amounts appropriated to the fund by the Legislature.
   (4) Any interest that accrues on amounts in the fund.
   (b) Any public agency transferring moneys to the fund may, for
that purpose, utilize any revenues, grants, or allocations received
from the state for health care programs or purposes, unless otherwise
prohibited by law.  A public agency may also utilize its general
funds or any other public moneys or revenues for purposes of
transfers to the fund, unless otherwise prohibited by law.
   (c) The department shall have the discretion to accept or not
accept moneys offered to the department for deposit in the fund.  If
the department accepts moneys pursuant to this section, the
department shall obtain federal matching funds to the full extent
permitted by law.  The department shall accept only those funds that
are certified by the transferring or donating entity as qualifying
for federal financial participation under the terms of the Medicaid
Voluntary Contribution and Provider-Specific Tax Amendments of 1991
(P.L. 102-234) or Section 433.51 of Title 42 of the Code of Federal
Regulations, as applicable, and may return any funds transferred or
donated in error.
   (d) Moneys in the fund shall be used as the source for the
nonfederal share of payments to hospitals under this section.  Moneys
shall be allocated from the fund by the department and matched by
federal funds in accordance with customary Medi-Cal accounting
procedures for purposes of payments under subdivision (e).
Distributions from the fund shall be supplemental to any other
amounts that hospitals receive under the contracting program.
   (e) For purposes of recognizing medical education costs incurred
for services rendered to Medi-Cal beneficiaries, payments from this
fund shall be negotiated between the California Medical Assistance
Commission and hospitals contracting under this article that meet the
definition of university teaching hospitals or major (nonuniversity)
teaching hospitals as set forth on page 51 and as listed on page 57
of the department's report dated May 1991, entitled "Hospital Peer
Grouping."  Payments from the fund shall be used solely for the
purposes identified in the contract between the hospital and the
state.
   (f) The state shall be held harmless from any federal disallowance
resulting from this section.  A hospital receiving supplemental
reimbursement pursuant to this section
                shall be liable for any reduced federal financial
participation resulting from the implementation of this section with
respect to that hospital.  The state may recoup any federal
disallowance from the hospital.
   (g) This section shall become inoperative on July 1, 2000, and, as
of January 1, 2001, is repealed, unless a later enacted statute,
that becomes effective on or before January 1, 2001, deletes or
extends the dates on which it becomes inoperative and is repealed.
  SEC. 42.  Section 14085.8 of the Welfare and Institutions Code is
amended to read:
   14085.8.  (a) The Large Teaching Emphasis Hospital and Children's
Hospital Medi-Cal Medical Education Supplemental Payment Fund is
hereby created in the State Treasury.
   (b) Notwithstanding Section 13340 of the Government Code, the fund
shall be continuously appropriated to, and under the administrative
control of, the department for the purposes specified in this
section.
   (c) Except as otherwise limited by this section, the fund shall
consist of all of the following:
   (1) All public moneys transferred by public agencies to the
department for deposit into the fund, as permitted under Section
433.51 of Title 42 of the Code of Federal Regulations or any other
applicable federal medicaid laws.
   (2) All private moneys donated by private individuals or entities
to the department for deposit in the fund as permitted under
applicable federal medicaid laws.
   (3) Any amounts appropriated to the fund by the Legislature.
   (4) Any interest that accrues on amounts in the fund.
   (d) Any public agency transferring moneys to the fund may, for
that purpose, utilize any revenues, grants, or allocations received
from the state for health care programs or purposes, unless otherwise
prohibited by law.  A public agency may also utilize its general
funds or any other public moneys or revenues for purposes of
transfers to the fund, unless otherwise prohibited by law.
   (e) The department may accept or not accept moneys offered to the
department for deposit in the fund.  If the department accepts moneys
pursuant to this section, the department shall obtain federal
matching funds to the full extent permitted by law.  The department
shall accept only those funds that are certified by the transferring
or donating entity as qualifying for federal financial participation
under the terms of the Medicaid Voluntary Contribution and
Provider-Specific Tax Amendments of 1991 (P.L. 102-234) or Section
433.51 of Title 42 of the Code of Federal Regulations, as applicable,
and may return any funds transferred or donated in error.
   (f) Moneys in the fund shall be used as the source for the
nonfederal share of payments to hospitals under this section.  Moneys
shall be allocated from the fund by the department and matched by
federal funds in accordance with customary Medi-Cal accounting
procedures for purposes of payments under subdivision (g).
Distributions from the fund shall be supplemental to any other
amounts that hospitals receive under the contracting program.
   (g) (1) For purposes of recognizing medical education costs
incurred for services rendered to Medi-Cal beneficiaries, contracts
for payments from the fund may, at the discretion of the California
Medical Assistance Commission, be negotiated between the commission
and hospitals contracting under this article that are defined as
either of the following:
   (A) A large teaching emphasis hospital, as set forth on page 51
and listed on page 57 of the department's report dated May 1991,
entitled "Hospital Peer Grouping," and meets the definition of
eligible hospital as defined in paragraph (3) of subdivision (a) of
Section 14105.98.
   (B) A children's hospital pursuant to Section 10727 and meets the
definition of eligible hospital as defined in paragraph (3) of
subdivision (a) of Section 14105.98.
   (2) Payments from the fund shall be used solely for the purposes
identified in the contract between the hospital and the state.
   (h) The state shall be held harmless from any federal disallowance
resulting from this section.  A hospital receiving supplemental
reimbursement pursuant to this section shall be liable for any
reduced federal financial participation resulting from the
implementation of this section with respect to that hospital.  The
state may recoup any federal disallowance from the hospital.
   (i) This section shall become inoperative on July 1, 2000, and, as
of January 1, 2001, is repealed, unless a later enacted statute,
that becomes effective on or before January 1, 2001, deletes or
extends the dates on which it becomes inoperative and is repealed.
  SEC. 43.  Section 14087.301 is added to the Welfare and
Institutions Code, to read:
   14087.301.  When entering into contracts with health care service
plans that provide comprehensive dental benefits to Medi-Cal
beneficiaries on an at-risk basis, the department may require that
the health care service plans pay for the costs of the administrative
and regulatory oversight required to monitor the contract compliance
terms of the agreement with the department.
  SEC. 44.  Section 14094.3 of the Welfare and Institutions Code is
amended to read:
   14094.3.  (a) Notwithstanding this article or Section 14093.05 or
14094.1, CCS covered services shall not be incorporated into any
Medi-Cal managed care contract entered into after August 1, 1994,
pursuant to Article 2.7 (commencing with Section 14087.3), Article
2.8 (commencing with Section 14087.5), Article 2.9 (commencing with
Section 14088), Article 2.91 (commencing with Section 14089), Article
2.95 (commencing with Section 14092); or either Article 2
(commencing with Section 14200), or Article 7 (commencing with
Section 14490) of Chapter 8, until August 1,  2005, except for
contracts entered into for county organized health systems in the
Counties of San Mateo, Santa Barbara, Solano and Napa.
   (b) Notwithstanding any other provision of this chapter, providers
serving children under the CCS program who are enrolled with a
Medi-Cal managed care contractor but who are not enrolled in a pilot
project pursuant to subdivision (c) shall continue to submit billing
for CCS covered services on a fee-for-service basis until CCS covered
services are incorporated into the Medi-Cal managed care contracts
described in subdivision (a).
   (c) (1) The department may authorize a pilot project in Solano
County in which reimbursement for conditions eligible under the CCS
program may be reimbursed on a capitated basis pursuant to Section
14093.05, and provided all CCS program's guidelines, standards, and
regulations are adhered to, and CCS program's case management is
utilized.
   (2) During the time period described in subdivision (a), the
department may approve, implement, and evaluate limited pilot
projects under the CCS program to test alternative managed care
models tailored to the special health care needs of children under
the CCS program.  The pilot projects may include, but need not be
limited to, coverage of different geographic areas, focusing on
certain subpopulations, and the employment of different payment and
incentive models.  Pilot project proposals from CCS program-approved
providers shall be given preference.  All pilot projects shall
utilize CCS program-approved standards and providers pursuant to
Section 14094.1.
   (d) (1) The department shall submit to the appropriate committees
of the Legislature an evaluation of pilot projects established
pursuant to subdivision (c) based on at least one full year of
operation.
   (2) The evaluation required by paragraph (1) shall address the
impact of the pilot projects on outcomes as set forth in paragraph
(4) and, in addition, shall do both of the following:
   (A) Examine the barriers, if any, to incorporating CCS covered
services into the Medi-Cal managed care contracts described in
subdivision (a).
   (B) Compare different pilot project models with the
fee-for-service system.  The evaluation shall identify, to the extent
possible, those factors that make pilot projects most effective in
meeting the special needs of children with CCS eligible conditions.
   (3) CCS covered services shall not be incorporated into the
Medi-Cal managed care contracts described in subdivision (a) before
the evaluation process has been completed.
   (4) The pilot projects shall be evaluated to determine if:
   (A) All children enrolled with a Medi-Cal managed care contractor
described in subdivision (a) identified as having a CCS eligible
condition are referred in a timely fashion for appropriate health
care.
   (B) All children in the CCS program have access to coordinated
care that includes primary care services in their own community.
   (C) CCS program standards are adhered to.
   (e) For purposes of this section, CCS covered services include all
program benefits administered by the program specified in Section
123840 of the Health and Safety Code regardless of the funding
source.
   (f) Nothing in this section shall be construed to exclude or
restrict CCS eligible children from enrollment with a managed care
contractor or from receiving from the managed care contractor with
which they are enrolled primary and other health care unrelated to
the treatment of the CCS eligible condition.
  SEC. 45.  Section 14105.31 of the Welfare and Institutions Code is
amended to read:
   14105.31.  For purposes of the Medi-Cal contract drug list, the
following definitions shall apply:
   (a) "Single-source drug" means a drug that is produced and
distributed under an original New Drug Application approved by the
federal Food and Drug Administration.  This shall include a drug
marketed by the innovator manufacturer and any cross-licensed
producers or distributors operating under the New Drug Application,
and shall also include a biological product, except for vaccines,
marketed by the innovator manufacturer and any cross-licensed
producers or distributors licensed by the federal Food and Drug
Administration pursuant to Section 262 of Title 42 of the United
States Code.  A drug ceases to be a single-source drug when the same
drug in the same dosage form and strength manufactured by another
manufacturer is approved by the federal Food and Drug Administration
under the provisions for an Abbreviated New Drug Application.
   (b) "Best price" means the negotiated price, or the manufacturer's
lowest price available to any class of trade organization or entity,
including, but not limited to, wholesalers, retailers, hospitals,
repackagers, providers, or governmental entities within the United
States, that contracts with a manufacturer for a specified price for
drugs, inclusive of cash discounts, free goods, volume discounts,
rebates, and on- or off-invoice discounts or credits, shall be based
upon the manufacturer's commonly used retail package sizes for the
drug sold by wholesalers to retail pharmacies.
   (c) "Equalization payment amount" means the amount negotiated
between the manufacturer and the department for reimbursement by the
manufacturer, as specified in the contract.  The equalization payment
amount shall be based on the difference between the manufacturer's
direct catalog price charged to wholesalers and the manufacturer's
best price, as defined in subdivision (b).
   (d) "Manufacturer" means any person, partnership, corporation, or
other institution or entity that is engaged in the production,
preparation, propagation, compounding, conversion, or processing of
drugs, either directly or indirectly by extraction from substances of
natural origin, or independently by means of chemical synthesis, or
by a combination of extraction and chemical synthesis, or in the
packaging, repackaging, labeling, relabeling, and distribution of
drugs.
   (e) "Price escalator" means a mutually agreed upon price specified
in the contract, to cover anticipated cost increases over the life
of the contract.
   (f) "Medi-Cal pharmacy costs" or "Medi-Cal drug costs" means all
reimbursements to pharmacy providers for services or merchandise,
including single-source or multiple-source prescription drugs,
over-the-counter medications, and medical supplies, or any other
costs billed by pharmacy providers under the Medi-Cal program.
   (g) "Medicaid rebate" means the rebate payment made by drug
manufacturers pursuant to Section 1927 of the federal Social Security
Act (42 U.S.C. Sec. 1396r-8).
   (h) "State rebate" means any negotiated rebate under the Drug
Discount Program in addition to the medicaid rebate.
   (i) "Date of mailing" means the date that is evidenced by the
postmark date by the United States Postal Service or other common
mail carrier on the envelope.
   (j) This section shall remain in effect only until January 1,
2001, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2001, deletes or extends
that date.
  SEC. 46.  Section 14105.33 of the Welfare and Institutions Code is
amended to read:
   14105.33.  (a) The department may enter into contracts with
manufacturers of single-source and multiple-source drugs, on a bid or
nonbid basis, for drugs from each major therapeutic category, and
shall maintain a list of those drugs for which contracts have been
executed.
   (b) (1) Contracts executed pursuant to this section shall be for
the manufacturer's best price, as defined in Section 14105.31, which
shall be specified in the contract, and subject to agreed upon price
escalators, as defined in that section.  The contracts shall provide
for an equalization payment amount, as defined in Section 14105.31,
to be remitted to the department quarterly.  The department shall
submit an invoice to each manufacturer for the equalization payment
amount, including supporting utilization data from the department's
prescription drug paid claims tapes within 30 days of receipt of the
Health Care Financing Administration's file of manufacturer rebate
information.  In lieu of paying the entire invoiced amount, a
manufacturer may contest the invoiced amount pursuant to procedures
established by the federal Health Care Financing Administration's
Medicaid Drug Rebate Program Releases or regulations by mailing a
notice, that shall set forth its grounds for contesting the invoiced
amount, to the department within 38 days of the department's mailing
of the state invoice and supporting utilization data.  For purposes
of state accounting practices only, the contested balance shall not
be considered an accounts receivable amount until final resolution of
the dispute pursuant to procedures established by the federal Health
Care Financing Administration's Medicaid Drug Rebate Program
Releases or regulations that results in a finding of an underpayment
by the manufacturer.  Manufacturers may request, and the department
shall timely provide, at cost, Medi-Cal provider level drug
utilization data, and other Medi-Cal utilization data necessary to
resolve a contested department-invoiced rebate amount.
   (2) The department shall provide for an annual audit of
utilization data used to calculate the equalization amount to verify
the accuracy of that data.  The findings of the audit shall be
documented in a written audit report to be made available to
manufacturers within 90 days of receipt of the report from the
auditor.  Any manufacturer may receive a copy of the audit report
upon written request.  Contracts between the department and
manufacturers shall provide for any equalization payment adjustments
determined necessary pursuant to an audit.
   (3) Utilization data used to determine an equalization payment
amount shall exclude data from both of the following:
   (A) Health maintenance organizations, as defined in Section 300e
(a) of Title 42 of the United States Code, including those
organizations that contract under Section 1396b(m) of Title 42 of the
United States Code.
   (B) Capitated plans that include a prescription drug benefit in
the capitated rate, and that have negotiated contracts for rebates or
discounts with manufacturers.
   (c) In order that Medi-Cal beneficiaries may have access to a
comprehensive range of therapeutic agents, the department shall
ensure that there is representation on the list of contract drugs in
all major therapeutic categories.  Except as provided in subdivision
(a) of Section 14105.35, the department shall not be required to
contract with all manufacturers who negotiate for a contract in a
particular category.  The department shall ensure that there is
sufficient representation of single-source and multiple-source drugs,
as appropriate, in each major therapeutic category.
   (d) (1) The department shall select the therapeutic categories to
be included on the list of contract drugs, and the order in which it
seeks contracts for those categories.  The department may establish
different contracting schedules for single-source and multiple-source
drugs within a given therapeutic category.
   (2) The department shall make every attempt to complete the
initial contracting process for each major therapeutic category by
January 1, 2001.
   (e) (1) In order to fully implement subdivision (d), the
department shall, to the extent necessary, negotiate or renegotiate
contracts to ensure there are as many single-source drugs within each
therapeutic category or subcategory as the department determines
necessary to meet the health needs of the Medi-Cal population.  The
department may determine in selected therapeutic categories or
subcategories that no single-source drugs are necessary because there
are currently sufficient multiple-source drugs in the therapeutic
category or subcategory on the list of contract drugs to meet the
health needs of the Medi-Cal population.  However, in no event shall
a beneficiary be denied continued use of a drug which is part of a
prescribed therapy in effect as of September 2, 1992, until the
prescribed therapy is no longer prescribed.
   (2) In the development of decisions by the department on the
required number of single-source drugs in a therapeutic category or
subcategory, and the relative therapeutic merits of each drug in a
therapeutic category or subcategory, the department shall consult
with the Medi-Cal Contract Drug Advisory Committee.  The committee
members shall communicate their comments and recommendations to the
department within 30 business days of a request for consultation, and
shall disclose any associations with pharmaceutical manufacturers or
any remuneration from pharmaceutical manufacturers.
   (3) In order to expedite implementation of paragraph (1), the
requirements of Sections 14105.37, 14105.38, subdivisions (a), (c),
(e), and (f) of Sections 14105.39, 14105.4, and 14105.405 are waived
for the purposes of this section until January 1, 1994.
   (f) In order to achieve maximum cost savings, the Legislature
declares that an expedited process for contracts under this section
is necessary.  Therefore, contracts entered into on a nonbid basis
shall be exempt from Chapter 2 (commencing with Section 10290) of
Part 2 of Division 2 of the Public Contract Code.
   (g) In no event shall a beneficiary be denied continued use of a
drug that is part of a prescribed therapy in effect as of September
2, 1992, until the prescribed therapy is no longer prescribed.
   (h) Contracts executed pursuant to this section shall be
confidential and shall be exempt from disclosure under the California
Public Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code).
   (i) The department shall provide individual notice to Medi-Cal
beneficiaries at least 60 calendar days prior to the effective date
of the deletion or suspension of any drug from the list of contract
drugs.  The notice shall include a description of the beneficiary's
right to a fair hearing and shall encourage the beneficiary to
consult a physician to determine if an appropriate substitute
medication is available from Medi-Cal.
   (j) In carrying out the provisions of this section, the department
may contract either directly, or through the fiscal intermediary,
for pharmacy consultant staff necessary to initially accomplish the
treatment authorization request reviews.
   (k) (1) Manufacturers shall calculate and pay interest on late or
unpaid rebates.  The interest shall not apply to any prior period
adjustments of unit rebate amounts or department utilization
adjustments.
   (2) For state rebate payments, manufacturers shall calculate and
pay interest on late or unpaid rebates for quarters that begin on or
after the effective date of the act that added this subdivision.
   (3) Following final resolution of any dispute pursuant to
procedures established by the federal Health Care Financing
Administration's Medicaid Drug Rebate Program Releases or regulations
regarding the amount of a rebate, any underpayment by a manufacturer
shall be paid with interest calculated pursuant to subdivisions (m)
and (n), and any overpayment, together with interest at the rate
calculated pursuant to subdivisions (m) and (n), shall be credited by
the department against future rebates due.
   (l) Interest pursuant to subdivision (k) shall begin accruing 38
calendar days from the date of mailing of the invoice, including
supporting utilization data sent to the manufacturer.  Interest shall
continue to accrue until the date of mailing of the manufacturer's
payment.
   (m) Except as specified in subdivision (n), interest rates and
calculations pursuant to subdivision (k) for medicaid rebates and
state rebates shall be identical and shall be determined by the
federal Health Care Financing Administration's Medicaid Drug Rebate
Program Releases or regulations.
   (n) If the date of mailing of a state rebate payment is 69 days or
more from the date of mailing of the invoice, including supporting
utilization data sent to the manufacturer, the interest rate and
calculations pursuant to subdivision (k) shall be as specified in
subdivision (m), however the interest rate shall be increased by 10
percentage points.  This subdivision shall apply to payments for
amounts invoiced for any quarters that begin on or after the
effective date of the act that added this subdivision.
   (o) If the rebate payment is not received, the department shall
send overdue notices to the manufacturer at 38, 68, and 98 days after
the date of mailing of the invoice, and supporting utilization data.
  If the department has not received a rebate payment, including
interest, within 180 days of the date of mailing of the invoice,
including supporting utilization data, the manufacturer's contract
with the department shall be deemed to be in default and the contract
may be terminated in accordance with the terms of the contract.  For
all other manufacturers, if the department has not received a rebate
payment, including interest, within 180 days of the date of mailing
of the invoice, including supporting utilization data, all of the
drug products of those manufacturers shall be made available only
through prior authorization effective 270 days after the date of
mailing of the invoice, including utilization data sent to
manufacturers.
   (p) If the manufacturer provides payment or evidence of payment to
the department at least 40 days prior to the proposed date the drug
is to be made available only through prior authorization pursuant to
subdivision (o), the department shall terminate its actions to place
the manufacturers' drug products on prior authorization.
   (q) The department shall direct the state's fiscal intermediary to
remove prior authorization requirements imposed pursuant to
subdivision (o) and notify providers within 60 days after payment by
the manufacturer of the rebate, including interest.  If a contract
was in place at the time the manufacturers' drugs were placed on
prior authorization, removal of prior authorization requirements
shall be contingent upon good faith negotiations and a signed
contract with the department.
   (r) A beneficiary may obtain drugs placed on prior authorization
pursuant to subdivision (o) if the beneficiary qualifies for
continuing care status.  To be eligible for continuing care status, a
beneficiary must be taking the drug when its manufacturer is placed
on prior authorization status.  Additionally, the department shall
have received a claim for the drug with a date of service that is
within 100 days prior to the date the manufacturer was placed on
prior authorization.
   (s) A beneficiary may remain eligible for continuing care status,
provided that a claim is submitted for the drug in question at least
every 100 days and the date of service of the claim is within 100
days of the date of service of the last claim submitted for the same
drug.
   (t) Drugs covered pursuant to Sections 14105.43 and 14133.2 shall
not be subject to prior authorization pursuant to subdivision (o),
and any other drug may be exempted from prior authorization by the
department if the director determines that an essential need exists
for that drug, and there are no other drugs currently available
without prior authorization that meet that need.
   (u) It is the intent of the Legislature in enacting subdivisions
(k) to (t), inclusive, that the department and manufacturers shall
cooperate and make every effort to resolve rebate payment disputes
within 90 days of notification by the manufacturer to the department
of a dispute in the calculation of rebate payments.
   (v) This section shall remain in effect only until January 1,
2001, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1,  2001, deletes or extends
that date.
  SEC. 47.  Section 14105.35 of the Welfare and Institutions Code is
amended to read:
   14105.35.  (a) (1) On and after July 1, 1990, drugs included on
the Medi-Cal drug formulary shall be included on the list of contract
drugs until the department and the manufacturer have concluded
contract negotiations or the department suspends the drug from the
list of contract drugs pursuant to the provisions of this
subdivision.
   The department shall, in writing, invite any manufacturer with
single-source drug products on the formulary as of July 1, 1990, to
enter into negotiations relative to the retention of its drug or
drugs.  As to the issue of cost, the department shall accept the
manufacturer's best price as sufficient for purposes of entering into
a contract to retain the drug or drugs on the list of contract
drugs.
   If the department and a manufacturer enter into a contract for
retention of a drug or drugs on the list of contract drugs, the drug
or drugs shall be retained on the list of contract drugs for the
effective term of the contract.
                                 If a manufacturer refuses to enter
into negotiations with the department pursuant to this subdivision,
or if after 30 days of negotiation, the manufacturer has not agreed
to execute a contract for a drug at the manufacturer's best price,
the department may suspend from the list of contract drugs the
manufacturer's single-source drug in question for a period of at
least 180 days.  The department shall lift the suspension upon
execution of a contract for that drug.  Consistent with the
provisions of this section, the department shall delete the Medi-Cal
drug formulary specified in paragraphs (b), (c), (d), and (e) of
Section 59999 of Title 22 of the California Code of Regulations.
   (2) On and after July 1, 1990, the director may retain a drug on
the Medi-Cal list of contract drugs even if no contract is executed
with a manufacturer, if the director determines that an essential
need exists for that drug, and there are no other drugs currently on
the formulary that meet that need.
   (3) The director may delete a drug from the list of contract drugs
if the director determines that the drug presents problems of safety
or misuse.  The director's decision as to safety shall be based upon
published medical literature, and the director's decision as to
misuse shall be based on published medical literature and claims data
supplied by the fiscal intermediary.
   (b) Any reference to the Medi-Cal drug formulary by statute or
regulation shall be construed as referring to the list of contract
drugs.
   (c) (1) Any drug in the process of being added to the formulary by
contract agreement pursuant to Section 14105.3, executed prior to
the effective date of this section, shall be added to the list of
contract drugs.
   (2) Contracts pursuant to Section 14105.3 executed prior to
January 1, 1991, shall be considered to be contracts executed
pursuant to Section 14105.33, and the department shall exempt the
drugs included in these contracts from the initial therapeutic
category review in which they would normally be considered.
   (3) Nothing in this section shall be construed to require the
department to discontinue negotiations into which it has entered with
any manufacturer as of the effective date of this section.
Contracts entered into as a result of these negotiations shall be
exempt from the initial therapeutic category review in which they
would normally be considered.
   (d) This section shall remain in effect only until January 1,
2001, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1,  2001, deletes or extends
that date.
  SEC. 48.  Section 14105.37 of the Welfare and Institutions Code is
amended to read:
   14105.37.  (a) The department shall notify each manufacturer of
drugs in therapeutic categories selected pursuant to Section 14105.33
of the provisions of Sections 14105.31 to 14105.42, inclusive.
   (b) If, within 45 days of notification, a manufacturer does not
enter into negotiations for a contract pursuant to those sections,
the department may suspend or delete from the list of contract drugs,
or refuse to consider for addition, drugs of that manufacturer in
the selected therapeutic categories.
   (c) If, after 150 days from the initial notification, a contract
is not executed for a drug currently on the list of contract drugs,
the department may suspend or delete the drug from the list of
contract drugs.
   (d) If, within 150 days from the initial notification, a contract
is executed for a drug currently on the list of contract drugs, the
department shall retain the drug on the list of contract drugs.
   (e) If, within 150 days from the date of the initial notification,
a contract is executed for a drug not currently on the list of
contract drugs, the department shall add the drug to the list of
contract drugs.
   (f) The department shall terminate all negotiations 150 days after
the initial notification.
   (g) The department may suspend or delete any drug from the list of
contract drugs at the expiration of the contract term or when the
contract between the department and the manufacturer of that drug is
terminated.
   (h) Any drug suspended from the list of contract drugs pursuant to
this section or Section 14105.35 shall be subject to prior
authorization, as if that drug were not on the list of contract
drugs.
   (i) Any drug suspended from the list of contract drugs pursuant to
this section or Section 14105.35 for at least 12 months may be
deleted from the list of contract drugs in accordance with the
provisions of Section 14105.38.
   (j) This section shall remain in effect only until January 1,
2001, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1,  2001, deletes or extends
that date.
  SEC. 49.  Section 14105.38 of the Welfare and Institutions Code is
amended to read:
   14105.38.  (a) (1) In the event the department determines a drug
should be deleted from the list of contract drugs, the department
shall conduct a public hearing, as provided in this section, to
receive comment on the impact of removing the drug.
   (2) (A) The department shall provide written notice 30 days prior
to the hearing.
   (B) The department shall send the notice required by this
subdivision to the manufacturer of the drug proposed to be deleted
and to organizations representing Medi-Cal beneficiaries.
   (b) (1) The hearing panel shall consist of the Chief, Medi-Cal
Drug Discount Program, who shall serve as chair, and the Medi-Cal
Contract Drug Advisory Committee.
   (2) The hearing shall be recorded and transcribed, and the
transcript available for public review.
   (3) Subsequent to hearing all public comment, and within 30 days
of the hearing, each panel member shall submit a recommendation
regarding deletion of the drug and the reason for the recommendation
to the director.
   (c) The director shall consider public comments provided at the
hearing and the recommendations of each panel member in determining
whether to delete the drug.
   (d) This section shall remain in effect only until January 1,
2001, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1,  2001, deletes or extends
that date.
  SEC. 50.  Section 14105.39 of the Welfare and Institutions Code is
amended to read:
   14105.39.  (a) (1) A manufacturer of a new single-source drug may
request inclusion of its drug on the list of contract drugs pursuant
to Section 14105.33 provided all of the following conditions are met:

   (A) The request is made within 12 months of approval for marketing
by the federal Food and Drug Administration.
   (B) The manufacturer agrees to negotiate a contract with the
department to provide the drug at the manufacturer's best price.
   (C) (i) The manufacturer provides the department with necessary
information, as specified by the department, in the request.
   (ii) Notwithstanding clause (i), either of the following may be
submitted by the manufacturer in lieu of the Summary Basis of
Approval prepared by the federal Food and Drug Administration for
that drug:
   (I) The federal Food and Drug Administration's approval or
approvable letter for the drug and federal Food and Drug
Administration's approved labeling.
   (II) The federal Food and Drug Administration's medical officers'
and pharmacologists' reviews and the federal Food and Drug
Administration's approved labeling.
   (D) The department had concluded contracting for the therapeutic
category in which the drug is included prior to approval of the drug
by the federal Food and Drug Administration.
   (2) Within 90 days from receipt of the request, the department
shall evaluate the request using the criteria identified in
subdivision (d), and shall submit the drug to the Medi-Cal Contract
Drug Advisory Committee.
   (b) Any petition for the addition to or deletion of a drug to the
Medi-Cal drug formulary submitted prior to July 31, 1990, shall be
deemed to be denied.  A manufacturer who has submitted a petition
deemed denied may request inclusion of that drug on the list of
contract drugs provided all of the following conditions are met:
   (1) The manufacturer agrees to negotiate for a contract with the
department to provide the drug at the manufacturer's best price.
   (2) The manufacturer provides the department with necessary
information, as specified by the department, in the request.
   (3) The manufacturer submits the request to the department prior
to October 1, 1990.
   (c) Any new drug designated as having an important therapeutic
gain and approved for marketing by the federal Food and Drug
Administration on or after July 31, 1990, shall immediately be
included on the list of contract drugs for a period of three years
provided that all of the following conditions are met:
   (1) The manufacturer offers the department its best price.
   (2) The drug is typically administered in an outpatient setting.
   (3) The drug is prescribed only for the indications and usage
specified in the federal Food and Drug Administration approved
labeling.
   (4) The drug is determined by the director to be safe, relative to
other drugs in the same therapeutic category on the list of contract
drugs.
   (d) (1) To ensure that the health needs of Medi-Cal beneficiaries
are met consistent with the intent of this chapter, the department
shall, when evaluating a decision to execute a contract, and when
evaluating drugs for retention on, addition to, or deletion from, the
list of contract drugs, use all of the following criteria:
   (A) The safety of the drug.
   (B) The effectiveness of the drug.
   (C) The essential need for the drug.
   (D) The potential for misuse of the drug.
   (E) The cost of the drug.
   (2) The deficiency of a drug when measured by one of these
criteria may be sufficient to support a decision that the drug should
not be added or retained, or should be deleted from the list.
However, the superiority of a drug under one criterion may be
sufficient to warrant the addition or retention of the drug,
notwithstanding a deficiency in another criterion.
   (e) (1) A manufacturer of single-source drugs denied a contract
pursuant to this section or Section 14105.33 or 14105.37, may file an
appeal of that decision with the director within 30 calendar days of
the department's written decision.
   (2) Within 30 calendar days of the manufacturer's appeal, the
director shall request a recommendation regarding the appeal from the
Medi-Cal Contract Drug Advisory Committee.  The committee shall
provide its recommendation in writing, within 30 calendar days of the
director's request.
   (3) The director shall issue a final decision on the appeal within
30 calendar days of the recommendation.
   (f) Deletions made to the list of contract drugs, including those
made pursuant to Section 14105.37, shall become effective no sooner
than 30 days after publication of the changes in provider bulletins.

   (g) Changes made to the list of contract drugs under this or any
other section are exempt from the requirements of the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4
(commencing with Section 11370), and Chapter 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code), and shall not be subject to the review and approval of the
Office of Administrative Law.
   (h) This section shall remain in effect only until January 1,
2001, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1,  2001, deletes or extends
that date.
  SEC. 51.  Section 14105.4 of the Welfare and Institutions Code, as
amended by Section 90 of Chapter 310 of the Statutes of 1998, is
amended to read:
   14105.4.  (a) The director shall appoint a Medi-Cal Contract Drug
Advisory Committee for the purpose of providing scientific and
medical analysis on drugs contained on the list of contract drugs.
The duties of the committee shall be as follows:
   (1) To review drugs in the Medi-Cal list of contract drugs and
make written recommendations to the director as to the addition of
any drug or the deletion of any drug from the list.  These
recommendations shall be in accordance with subdivision (d) of
Section 14105.39.
   (2) To review and report in writing to the director as to the
comparative therapeutic effect of drugs in accordance with Section
14053.5.
   (3) To prepare a fair, impartial, and independent recommendation
in writing, regarding appeals from manufacturers made pursuant to
subdivision (e) of Section 14105.39.
   (b) The committee shall consist of at least one representative
from each of the following groups:
   (1) Physicians.
   (2) Pharmacists.
   (3) Schools of pharmacy or pharmacologists.
   (4) Medi-Cal beneficiaries.
   (c) Members of the committee shall be reimbursed for necessary
travel and other expenses incurred in the performance of official
committee duties.
   (d) In order to provide sufficient scientific information and
analysis in the therapeutic categories under review, the director may
replace a representative if required for specific expertise.
   (e) The director shall notify the committee of the decisions made
on the recommendations.
   (f) This section shall remain in effect only until January 1,
2001, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1,  2001, deletes or extends
that date.
  SEC. 52.  Section 14105.4 of the Welfare and Institutions Code, as
amended by Section 91 of Chapter 310 of the Statutes of 1998, is
amended to read:
   14105.4.  (a) The department shall schedule and conduct a public
regulatory hearing to consider the addition of a drug to, or the
deletion of a drug from, the Medi-Cal drug formulary five working
days subsequent to the Medical Therapeutic and Drug Advisory
Committee meeting which shall meet at least every four months.  The
public hearing may consist of written testimony only, and the hearing
record shall be closed at the end of the public hearing.
   (b) The department shall make available 45 days prior to the
public hearing the department's estimate of any anticipated costs or
savings to the state from adding a drug product to, or deleting a
drug product from, the Medi-Cal drug formulary.
   (c) Whenever the department accepts a completed petition to add a
drug product to the Medi-Cal drug formulary and it is not processed
pursuant to Section 14105.9, it shall be scheduled for review at the
next regularly scheduled Medical Therapeutic and Drug Advisory
Committee meeting and public regulatory hearing, unless the meeting
and hearing are scheduled to occur within 120 days, in which case the
drug product may be scheduled for the following hearing.
   (d) The director shall issue a final decision regarding the drug
product and shall submit any regulation adding a drug product to, or
deleting a drug product from, the Medi-Cal drug formulary to the
Office of Administrative Law, along with the completed rulemaking
record, within seven months after the hearing prescribed in
subdivision (a).  This section shall not, however, be construed in a
manner which results in the disapproval or invalidation of a
regulation for failure to comply with the timeframes prescribed in
this subdivision and subdivisions (a) and (c).
   (e) (1) Except as provided in paragraph (2), the criteria used by
the department in deciding whether a drug product shall be added to
or deleted from the formulary shall be limited to the criteria
adopted as department regulations.  The criteria shall be specific
and unambiguous.
   (2) Notwithstanding paragraph (1), either of the following may be
submitted by the manufacturer in lieu of the Summary Basis of
Approval prepared by the federal Food and Drug Administration for
that drug:
   (A) The federal Food and Drug Administration's approval or
approvable letter for the drug and federal Food and Drug
Administration's approved labeling.
   (B) The federal Food and Drug Administration's medical officers'
and pharmacologists' reviews and the federal Food and Drug
Administration's approved labeling.
   (f) Departmental requests for information from persons filing drug
petitions to which this section applies shall be specific and
unambiguous and shall be made solely for the purpose of addressing
the criteria utilized in accordance with subdivision (e).
   (g) All published studies received by the department pursuant to a
drug petition prior to the close of the public regulatory hearing
record shall be accepted and considered by the department.
   (h) Whenever the director decides to reject a petition to add a
drug product to, or delete a drug product from, the formulary, the
director shall notify the petitioner directly and in writing
indicating the reason and specifying the criteria utilized in
reaching the decision.
   (i) The department shall accept a petition for a drug that has
been rejected by the director upon the submission of another complete
petition containing substantial new information that addresses the
reason or reasons for rejection stated by the director pursuant to
subdivision (h).  Any petition accepted pursuant to this subdivision
shall be processed in accordance with subdivision (c), or Section
14105.9, whichever is applicable.
   (j) This section shall become operative on January 1, 2001.
  SEC. 53.  Section 14105.405 of the Welfare and Institutions Code is
amended to read:
   14105.405.  (a) A Medi-Cal beneficiary, within 90 days of receipt
of the director's notice to beneficiaries pursuant to subdivision (g)
of Section 14105.33, informing them of the decision to delete or
suspend a drug from the list of contract drugs, may request a fair
hearing pursuant to Chapter 7 (commencing with Section 10950) of Part
2.
   (b) Any beneficiary filing a fair hearing request regarding the
deletion or suspension of a drug from the formulary shall be granted
a treatment authorization request for that drug until a final
decision is adopted by the director.  Should the beneficiary seek
judicial review of the director's decision, a treatment authorization
request shall be granted for that drug until a final decision is
issued by the court.
   (c) (1) Any Medi-Cal beneficiary, within one year of the director'
s decision pursuant to Section 10959, may file a petition with the
superior court, under the provisions of Section 1094.5 of the Code of
Civil Procedure, praying for a review of both the legal and factual
basis for the director's decision.
   (2) The director shall be the sole respondent in these
proceedings.
   (d) Any Medi-Cal beneficiary injured as a result of being denied a
drug which is determined to be medically necessary may sue for
injunctive or declaratory relief to review the director's decision to
delete or suspend a drug from the list of contract drugs.
   (e) This section shall remain in effect only until January 1,
2001, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2001, deletes or extends
that date.
  SEC. 54.  Section 14105.41 of the Welfare and Institutions Code, as
amended by Section 93 of Chapter 310 of the Statutes of 1998, is
amended to read:
   14105.41.  (a) Moneys accruing to the department from contracts
executed pursuant to Section 14105.33 shall be deposited in the
Health Care Deposit Fund, and shall be subject to appropriation by
the Legislature.
   (b) This section shall remain in effect only until January 1,
2001, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1,  2001, deletes or extends
that date.
  SEC. 55.  Section 14105.41 of the Welfare and Institutions Code, as
amended by Section 94 of Chapter 310 of the Statutes of 1998, is
amended to read:
   14105.41.  (a) For the purpose of adding drugs to, or deleting
drugs from, the Medi-Cal drug formulary as described in Section
14105.4, whether pursuant to a petition or by the department
independent of a petition, all of the requirements of the
Administrative Procedure Act contained in Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code shall be applicable except that the requirements of
subdivision (a) of Section 11340.7 and subdivision (a) of Section
11346.9 of the Government Code shall be deemed to have been complied
with if the department does all of the following:
   (1) Upon receipt of a petition requesting the addition of a drug
to, or the deletion of a drug from, the Medi-Cal drug formulary, the
department shall notify the petitioner directly and in writing of the
receipt of the petition and shall, within 30 days, either return the
petition as incomplete or schedule the petition for public hearing,
unless the public hearing is not required pursuant to Section
14105.9.
   (2) Notifies each petitioner directly and in writing of its
decision regarding the addition of a drug product to, or deletion of
a drug product from, the formulary and shall state the reason or
reasons for its decision and the specific regulatory criteria that
are the basis of the department's decision.
   (3) Prepares and submits to the Office of Administrative Law with
the adopted regulation all of the following for each drug which the
department has decided to add to, or delete from, the Medi-Cal drug
formulary:
   (A) A brief summary of the comments submitted.  For the purpose of
this section, "comments" shall mean the major points raised in
testimony which specifically address the regulatory criteria upon
which the department is authorized, pursuant to subdivision (e) of
Section 14105.4, to base a decision to add or delete a drug from the
formulary.
   (B) The recommendation of the Medical Therapeutic and Drug
Advisory Committee.
   (C) The decision of the department.
   (D) A statement of the reason and the specific regulatory criteria
that are the basis of the department's decision.
   (b) Any additional information provided to the department during
the posting of revisions to the proposed regulation shall be
responded to by the department directly and in writing to the
originator.  That response shall notify the originator whether the
additional information has resulted in a changed decision.
   (c) For the purpose of review by the court, if any, and review and
approval by the Office of Administrative Law of changes to the
Medi-Cal drug formulary adopted by the department, each drug added
to, or deleted from, the formulary shall be considered to be a
separate regulation and shall be severable from all other additions
or deletions of drugs contained in the rulemaking file.
   (d) This section shall be applicable to any Medi-Cal drug
formulary regulation package filed with the Office of Administrative
Law on or after January 1,  2001.
   (e) This section shall become operative on January 1, 2001.
  SEC. 56.  Section 14105.42 of the Welfare and Institutions Code, as
amended by Section 95 of Chapter 310 of the Statutes of 1998, is
amended to read:
   14105.42.  (a) The department shall report to the Legislature
after the first three major therapeutic categories have been reviewed
and contracts executed.  The report shall include the estimated
savings, number of manufacturers entering negotiations, number of
contracts executed, number of drugs added and deleted, and impact on
Medi-Cal beneficiaries and providers.
   (b) The department shall provide the following data to the
Legislature and to the State Auditor by January 1, 1991, and every
six months thereafter:
   (1) The number of drug treatment authorization requests (TAR)
received by facsimile, by secondary answering system and in person
for each therapeutic category.
   (2) The number of drug TARS requested, approved, denied, and
returned.
   (3) The length of time between the TAR request and the decision,
specified by type of communication such as telephone or facsimile if
available.
   (4) For denied TARS, the number of fair hearings requested,
approved, denied and pending.
   (5) The numbers of providers who were unable to submit a request
or made multiple attempts because of faulty or unavailable lines of
communication, if available.
   (6) The numbers of complaints made by beneficiaries and providers
relating to difficulty or inability to obtain a TAR response.
   (7) The status of the enhancements to the TAR process specified in
Section 21 of Chapter 457 of the Statutes of 1990.
   (8) The number of calls on the TAR line which are not getting
through.
   (c) Until January 1,  2001, or the date of the report specified in
subdivision (e), whichever is earlier, the State Auditor shall
prepare a report by February 1, 1991, and every six months thereafter
providing a summary and analysis of the data specified in
subdivision (b), and a comparative analysis of changes in the TAR
process using June 1, 1990, as a base.  The analysis shall include a
measure of increased or decreased ability to contact the department
and receive a response in a shorter or greater period of time.
   (d)  The department shall report to the Legislature, through the
annual budget process, on the cost-effectiveness of contracts
executed pursuant to Section 14105.33.
   (e) The Joint Legislative Audit Committee may review and report on
the requirements imposed on the State Auditor by subdivision (c) on
or before January 1,  2001.
   (f) This section shall remain in effect only until January 1,
2001, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1,  2001, deletes or extends
that date.
  SEC. 57.  Section 14105.91 of the Welfare and Institutions Code is
amended to read:
   14105.91.  The department may add a drug to the formulary which is
a different dosage form, or strength of a drug product which is
listed in the formulary without review by the Medical Therapeutics
and Drug Advisory Committee and the addition shall be deemed to
comply with the requirements of the California Administrative
Procedure Act.
   This section shall become operative on January 1, 2001.
  SEC. 58.  Section 14105.915 of the Welfare and Institutions Code is
amended to read:
   14105.915.  The department may remove any drug from the formulary
at the expiration of the contract term or when the contract between
the department and the manufacturer of that drug is terminated.
   This section shall become operative on January 1,  2001.
  SEC. 59.  Section 14105.916 of the Welfare and Institutions Code is
amended to read:
   14105.916.  Notwithstanding any other provision of law, on and
after January 1,  2001, drugs on the Medi-Cal list of contract drugs
shall become the Medi-Cal
drug formulary.
  SEC. 60.  Section 14105.981 of the Welfare and Institutions Code is
amended to read:
   14105.981.  (a) In addition to the requirements of subdivision (t)
of Section 14105.98:
   (1) Except as provided in paragraph (2), the department shall take
all appropriate steps permitted by law and the Medi-Cal state plan
to ensure the following for all years of the payment adjustment
program.
   (A) That transitional inpatient days are included in the payment
adjustment program in the same fashion as all other Medi-Cal days of
acute inpatient hospital service.
   (B) That, to the same extent as any other Medi-Cal days of acute
inpatient hospital service, transitional inpatient days are included
as payable days under the payment adjustment program and in the total
annualized Medi-Cal inpatient paid days.
   (2) In no event shall paragraph (1) be implemented in a fashion
that is inconsistent with federal medicaid law or the Medi-Cal state
plan or any relevant amendments thereto.
   (b) This section shall remain in effect only until January 1,
2001, and as of that date is repealed, unless a later enacted
statute, that is enacted on or before January 1, 2001, deletes or
extends that date.
  SEC. 61.  Section 14107.11 is added to the Welfare and Institutions
Code, to read:
   14107.11.  (a) Upon receipt of reliable evidence of fraud or
willful misrepresentation by a provider under the Medi-Cal program,
the department may:
   (1) Collect any Medi-Cal program overpayment identified through an
audit or examination, or any portion thereof from any provider.
Notwithstanding Section 100171 of the Health and Safety Code, a
provider may appeal the collection of overpayments under this section
pursuant to procedures established in Article 5.3 (commencing with
Section 14170).  Overpayments collected under this section shall not
be returned to the provider during the pendency of any appeal and may
be offset to satisfy audit or appeal findings if the findings are
against the provider.  Overpayments will be returned to a provider
with interest if findings are in favor of the provider.
   (2) Withhold payment for any goods or services, or any portion
thereof, from any Medi-Cal program provider.  The department shall
notify the provider within five days of any withholding of payment
under this section.  The notice shall do all of the following:
   (A) State that payments are being withheld in accordance with this
subdivision and that the withholding is for a temporary period and
will not continue after it is determined that there is insufficient
evidence of fraud or willful misrepresentation or when legal
proceedings relating to the alleged fraud or willful
misrepresentation are complete.
   (B) Cite the circumstances under which the withholding of the
payments will be terminated.
   (C) Specify, when appropriate, the type or types of claimed
payments being withheld.
   (D) Inform the provider of the right to submit written evidence
for consideration  by the department.
   (3) Notwithstanding Section 100171 of the Health and Safety Code,
a provider may appeal a withholding of payment pursuant to Section
14043.65.  Payments withheld under this section shall not be returned
to the provider during the pendency of any appeal and may be offset
to satisfy audit or appeal findings.
   (b) The director may adopt regulations to implement this section
as necessary.  These regulations may be adopted as emergency
regulations in accordance with the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) Part 1 of Division 3 of
Title 2 of the Government Code) and the adoption of the regulations
shall be deemed to be an emergency and necessary for the immediate
preservation of the public peace, health and safety, or general
welfare.  The director shall transmit these emergency regulations
directly to the Secretary of State for filing and the regulations
shall become effective immediately upon filing.  Upon completion of
the formal regulation adoption process and prior to the expiration of
the 120-day duration period of emergency regulations, the director
shall transmit directly to the Secretary of State the adopted
regulations, the rulemaking file, and the certification of compliance
as required by subdivision (e) of Section 11346.1 of the Government
Code.
   (c) For purposes of this section, "provider" means any individual,
partnership, group, association, corporation, institution, or
entity, and the officers, directors, employees, or agents thereof,
that provide services, goods, supplies, or merchandise, directly or
indirectly, to a Medi-Cal beneficiary, and that has been enrolled in
the Medi-Cal program.
  SEC. 62.  Section 14110.6 of the Welfare and Institutions Code is
amended to read:
   14110.6.  (a) The director shall adopt regulations, establishing
payment rates for nursing facilities, intermediate care
facilities/developmentally disabled, and intermediate care
facilities/developmentally disabled-habilitative as defined in
Section 1250 of the Health and Safety Code, which are sufficient to
provide an increase of one dollar and ninety-six cents ($1.96) per
patient day for patients receiving skilled nursing services, one
dollar and fifty-eight cents ($1.58) per patient day, for patients
receiving intermediate care services, two dollars and twenty-nine
cents ($2.29) per patient day for intermediate care
facilities/developmentally disabled patients, to be used for wage
increases and benefits to all employees, except a licensed nursing
home administrator or an administrator-in-training and two dollars
and thirty-five cents ($2.35) per patient day for intermediate care
facilities/developmentally disabled-habilitative patients in
facilities with 4 to 6 beds, and one dollar and ninety-eight cents
($1.98) per patient day for intermediate care
facilities/developmentally disabled-habilitative patients in
facilities with 7 to 15 beds, to be used for wage increases and
benefits to all direct care staff.  However, if either (1) the entry
level wages of the lowest paid nonadministrative employee of a
nursing facility, intermediate care facility/developmentally
disabled, or intermediate care facility/developmentally
disabled-habilitative, exceeds six dollars ($6) per hour as of August
1, 1984; or (2) upon the election of a county board of supervisors,
for any nursing facility, intermediate care facility/developmentally
disabled, or intermediate care facility/developmentally
disabled-habilitative, which is operated by a county, the funds
received pursuant to regulations adopted pursuant to this section
shall be used solely for labor costs directly related to providing
patient care services in order to meet patients' needs including the
uses of funds provided for under subdivision (d) of Section 14110.7.
Any increase in wages and benefits required by this section shall be
in addition to any future mandatory increases required by federal or
state law.  The rate shall provide funding for the portion of
additional costs necessary to implement the wage and benefit increase
required by this section attributable to Medi-Cal patients.  The
portion of those additional costs shall be the same as the ratio of
Medi-Cal patients to the total number of patients in the facility.
These regulations shall be adopted, effective March 15, 1985, for
skilled nursing facilities, intermediate care facilities, and
intermediate care facilities/developmentally disabled, and by October
1, 1985, for intermediate care facilities/developmentally
disabled-habilitative.  Commencing October 1, 1990, these
requirements shall become operative for nursing facilities.
   (b) Each nursing facility or intermediate care
facility/developmentally disabled, or, for the period prior to
October 1, 1990, each skilled nursing facility or intermediate care
facility, shall certify all of the following:
   (1) All employees, except a licensed nursing home administrator or
an administrator-in-training of a licensed nursing home, shall
receive at least the prevailing federal or state minimum wage rate
plus the average hourly wage increase established pursuant to Chapter
19 of the Statutes of 1978, and this section.
   (2) All employees of the facility, except a licensed administrator
or administrator-in-training, shall be paid not less than the sum of
the employee's actual rate of pay as of the effective date of the
Medi-Cal rate increase provided for under Section 14110.7 plus the
amount of the adjustment specified pursuant to this section, or not
less than the applicable agreed to rate plus the amount of the
adjustment, whichever is greater.
   (3) Any wage increase required pursuant to Section 1268.5 of the
Health and Safety Code, is in addition to any minimum wages provided
in this section.
   (4) For purposes of determining the amount of Medi-Cal funds to be
distributed for employee wages and benefits, the total Medi-Cal
patient days recorded by the facility in the month of December 1983
shall be multiplied by the amount per patient day specified in
subdivision (a) plus the amount provided by Chapter 19 of the
Statutes of 1978.  The new wage levels shall be determined by
dividing the Medi-Cal funds received by the nonovertime hours worked
by covered employees in December 1983, plus any adjustments due to
additional employees as specified in Section 14110.7 and adjustments
to reflect employee benefit allowances.
   (c) Each intermediate care facility/developmentally
disabled-habilitative shall certify all of the following:
   (1) All direct care staff, as defined in the department's
regulations developed pursuant to Section 1267.7 of the Health and
Safety Code, shall receive at least the prevailing federal or state
minimum wage plus the average hourly wage increase pursuant to this
section.
   (2) For purposes of determining the amount of Medi-Cal funds to be
distributed for intermediate care facilities/developmentally
disabled-habilitative for employee wages and benefits, the total
Medi-Cal patient days in the month of December 1984, shall be
multiplied by the amount per patient day specified in subdivision
(a).  The new wage level shall be determined by dividing the Medi-Cal
funds received by the nonovertime hours by covered direct care
employees in December 1984, and adjustments to reflect employee
benefit allowances.
   (d) The director shall order the inspection of relevant payroll
and personnel records of facilities which are reimbursed for Medi-Cal
patients under the rate of reimbursement established pursuant to
subdivision (a) to ensure that the wage and benefit increases
provided for have been implemented.
   (e) The department shall, commencing August 1, 1999, increase the
Medi-Cal reimbursement for level A and level B nursing facilities
solely to provide funds for salaries, wages, and benefits increases
for direct care staff.  For the purposes of this subdivision, "direct
care staff" means registered nurses, licensed vocational nurses, and
nurse assistants, who provide direct patient care.  The amount of
funds to be provided to each level A and level B facility pursuant to
this subdivision shall be calculated on a per patient day basis, and
shall be added to the per diem rate paid to each facility.  The
amount of funds provided under this subdivision to each nursing
facility peer group shall be published in a Medi-Cal provider
bulletin.  Level A and level B facilities shall compensate their
registered nurses, licensed vocational nurses, and nurse assistants
that portion of the rate increase provided under this subdivision in
the form of salaries, wages, and benefits increases for their direct
care staff.  The total amount to be passed through by each facility
shall be the per diem amount received by the facility pursuant to
this subdivision times the facility's number of Medi-Cal patient
days.
   (f) Any facility which is paid under the rate provided for in
subdivision (a) or (e) which the director finds has not made the wage
and benefit increases provided for shall be liable for the amount of
funds paid to the facility based upon the wage and benefit
requirements provided for by this section but not distributed to
employees for wages and benefits, plus a penalty equal to 10 percent
of the funds not so distributed.
  SEC. 63.  Section 14110.7 of the Welfare and Institutions Code, as
amended by Section 3 of Chapter 502 of the Statutes of 1990, is
amended to read:
   14110.7.  (a) The director shall adopt regulations increasing the
minimum number of equivalent nursing hours per patient required in
skilled nursing facilities to 3.2, in skilled nursing facilities with
special treatment programs to 2.3, in intermediate care facilities
to 1.1, and in intermediate care facilities/developmentally disabled
to 2.7.
   (b) (1) The director shall adopt regulations which shall establish
the minimum number of equivalent nursing hours per patient required
in the following, for the first year of implementation of the first
year of rates established pursuant to this article:
   (A) 2.6 hours for skilled nursing facilities.
   (B) 1.9 hours for skilled nursing facilities with special
treatment programs.
   (C) 0.9 hours for intermediate care facilities.
   (D) 2.2 hours for intermediate care facilities/developmentally
disabled.
   (2) The staffing standards established by paragraph (1) shall
become effective concurrently with the establishment of the first
reimbursement rates under this article.
   (3) The director shall adopt regulations which establish the
minimum number of equivalent nursing hours per patient required in
skilled nursing facilities at 2.7 for the second year of
implementation of rates established pursuant to this article.
   (c) (1) The Legislature finds and declares all of the following:
   (A) The one-year transition phase from 2.6 to 2.7 equivalent
nursing hours allows ample time to restructure staffing.
   (B) The 4 percent augmentation to reimburse for direct patient
care, as defined in paragraph (2) of subdivision (b) of Section
14126.60, provides funds to cover additional expenses, if any,
incurred by facilities to implement this staffing standard.
   (2) Subject to the appropriation of sufficient funds, the
department may adopt regulations to increase the minimum number of
equivalent nursing hours required of facilities subject to this
section per patient beyond 2.7 nursing hours per patient day.
   (d) (1) The department shall identify those skilled nursing
facilities that are in compliance with the 3.0 minimum double nursing
hour standards, as defined in subdivision (a) of Section 1276.5 of
the Health and Safety Code, but have actual staffing ratios below
2.5, as of July 1, 1990, and shall not enforce the 2.7 equivalent
nursing hours with respect to those facilities until the third year
of implementation of the rates established under this article.
   (2) The department shall periodically review facilities which have
actual staffing ratios described in paragraph (1) to ensure that
they are making sufficient progress toward 2.7 hours.
   (e) Notwithstanding paragraph (1) of subdivision (d), commencing
January 1, 2000, the minimum number of nursing hours per patient day
required in skilled nursing facilities shall be 3.2, without regard
to the doubling of nursing hours as described in Section 1276.5 of
the Health and Safety Code.
  SEC. 64.  Section 14132 of the Welfare and Institutions Code is
amended to read:
   14132.  The following is the schedule of benefits under this
chapter:
   (a) Outpatient services are covered as follows:
   Physician, hospital or clinic outpatient, surgical center,
respiratory care, optometric, chiropractic, psychology, podiatric,
occupational therapy, physical therapy, speech therapy, audiology,
acupuncture to the extent federal matching funds are provided for
acupuncture, and services of persons rendering treatment by prayer or
healing by spiritual means in the practice of any church or
religious denomination insofar as these can be encompassed by federal
participation under an approved plan, subject to utilization
controls.
   (b) Inpatient hospital services, including, but not limited to,
physician and podiatric services, physical therapy and occupational
therapy, are covered subject to utilization controls.
   (c) Nursing facility services, subacute care services, and
services provided by any category of intermediate care facility for
the developmentally disabled, including podiatry, physician, nurse
practitioner services, and prescribed drugs, as described in
subdivision (d), are covered subject to utilization controls.
Respiratory care, physical therapy, occupational therapy, speech
therapy, and audiology services for patients in nursing facilities
and any category of intermediate care facility for the
developmentally disabled are covered subject to utilization controls.

   (d) Purchase of prescribed drugs is covered subject to the
Medi-Cal List of Contract Drugs and utilization controls.
   (e) Outpatient dialysis services and home hemodialysis services,
including physician services, medical supplies, drugs and equipment
required for dialysis, are covered, subject to utilization controls.

   (f) Anesthesiologist services when provided as part of an
outpatient medical procedure, nurse anesthetists services when
rendered in an inpatient or outpatient setting under conditions set
forth by the director, outpatient laboratory services, and X-ray
services are covered, subject to utilization controls.  Nothing in
this subdivision shall be construed to require prior authorization
for anesthesiologist services provided as part of an outpatient
medical procedure or for portable X-ray services in a nursing
facility or any category of intermediate care facility for the
developmentally disabled.
   (g) Blood and blood derivatives are covered.
   (h) (1) Emergency and essential diagnostic and restorative dental
services, except for orthodontic, fixed bridgework, and partial
dentures that are not necessary for balance of a complete artificial
denture, are covered, subject to utilization controls.  The
utilization controls shall allow emergency and essential diagnostic
and restorative dental services and prostheses that are necessary to
prevent a significant disability or to replace previously furnished
prostheses which are lost or destroyed due to circumstances beyond
the beneficiary's control.  The department's utilization controls
shall not require X-rays as a condition of reimbursement for fillings
for children under 18 years of age.  Notwithstanding the foregoing,
the director may by regulation provide for certain fixed artificial
dentures necessary for obtaining employment or for medical conditions
which preclude the use of removable dental prostheses, and for
orthodontic services in cleft palate deformities administered by the
department's California Children Services Program.
   (2) For persons 21 years of age or older, the services specified
in paragraph (1) shall be provided subject to the following
conditions:
   (A) Periodontal treatment is not a benefit.
   (B) Endodontic therapy is not a benefit except for vital
pulpotomy.
   (C) Laboratory processed crowns are not a benefit.
   (D) Removable prosthetics shall be a benefit only for patients as
a requirement for employment.
   (E) The director may, by regulation, provide for the provision of
fixed artificial dentures that are necessary for medical conditions
that preclude the use of removable dental prostheses.
   (F) Notwithstanding the conditions specified in subparagraphs (A)
to (E), inclusive, the department may approve services for persons
with special medical disorders subject to utilization review.
   (3) Paragraph (2) shall become inoperative July 1, 1995.
   (i) Medical transportation is covered, subject to utilization
controls.
   (j) Home health care services are covered, subject to utilization
controls.
   (k) Prosthetic and orthotic devices and eyeglasses are covered,
subject to utilization controls.  Utilization controls shall allow
replacement of prosthetic and orthotic devices and eyeglasses
necessary because of loss or destruction due to circumstances beyond
the beneficiary's control.  Frame styles for eyeglasses replaced
pursuant to this subdivision shall not change more than once every
two years, unless the department so directs.
   Orthopedic and conventional shoes are covered when provided by a
prosthetic and orthotic supplier on the prescription of a physician
and when at least one of the shoes will be attached to a prosthesis
or brace, subject to utilization controls.  Modification of stock
conventional or orthopedic shoes when medically indicated, is covered
subject to utilization controls.  When there is a clearly
established medical need that cannot be satisfied by the modification
of stock conventional or orthopedic shoes, custom-made orthopedic
shoes are covered, subject to utilization controls.
   (l) Hearing aids are covered, subject to utilization controls.
Utilization controls shall allow replacement of hearing aids
necessary because of loss or destruction due to circumstances beyond
the beneficiary's control.
   (m) Durable medical equipment and medical supplies are covered,
subject to utilization controls.  The utilization controls shall
allow the replacement of durable medical equipment and medical
supplies when necessary because of loss or destruction due to
circumstances beyond the beneficiary's control.
   (n) Family planning services are covered, subject to utilization
controls.
   (o) Inpatient intensive rehabilitation hospital services,
including respiratory rehabilitation services, in a general acute
care hospital are covered, subject to utilization controls, when
either of the following criteria are met:
   (1) A patient with a permanent disability or severe impairment
requires an inpatient intensive rehabilitation hospital program as
described in Section 14064 to develop function beyond the limited
amount that would occur in the normal course of recovery.
   (2) A patient with a chronic or progressive disease requires an
inpatient intensive rehabilitation hospital program as described in
Section 14064 to maintain the patient's present functional level as
long as possible.
   (p) Adult day health care is covered in accordance with Chapter
8.7 (commencing with Section 14520).
   (q) (1) Application of fluoride, or other appropriate fluoride
treatment as defined by the department, other prophylaxis treatment
for children 17 years of age and under, are covered.
   (2) All dental hygiene services provided by a registered dental
hygienist in alternative practice pursuant to Sections 1768 and 1770
of the Business and Professions Code may be covered as long as they
are within the scope of Denti-Cal benefits and they are necessary
services provided by a registered dental hygienist in alternative
practice.
   (r) (1) Paramedic services performed by a city, county, or special
district, or pursuant to a contract with a city, county, or special
district, and pursuant to a program established under Article 3
(commencing with Section 1480) of Chapter 2.5 of Division 2 of the
Health and Safety Code by a paramedic certified pursuant to that
article, and consisting of defibrillation and those services
specified in subdivision (3) of Section 1482 of the article.
   (2) All providers enrolled under this subdivision shall satisfy
all applicable statutory and regulatory requirements for becoming a
Medi-Cal provider.
   (3) This subdivision shall be implemented only to the extent
funding is available under Section 14106.6.
   (s) In-home medical care services are covered when medically
appropriate and subject to utilization controls, for beneficiaries
who would otherwise require care for an extended period of time in an
acute care hospital at a cost higher than in-home medical care
services.  The director shall have the authority under this section
to contract with organizations qualified to provide in-home medical
care services to those persons.  These services may be provided to
patients placed in shared or congregate living arrangements, if a
home setting is not medically appropriate or available to the
beneficiary.  As used in this section, "in-home medical care service"
includes utility bills directly attributable to continuous, 24-hour
operation of life-sustaining medical equipment, to the extent that
federal financial participation is available.
   As used in this subdivision, in-home medical care services,
include, but are not limited to:
   (1) Level of care and cost of care evaluations.
   (2) Expenses, directly attributable to home care activities, for
materials.
   (3) Physician fees for home visits.
   (4) Expenses directly attributable to home care activities for
shelter and modification to shelter.
   (5) Expenses directly attributable to additional costs of special
diets, including tube feeding.
   (6) Medically related personal services.
   (7) Home nursing education.
   (8) Emergency maintenance repair.
   (9) Home health agency personnel benefits which permit coverage of
care during periods when regular personnel are on vacation or using
sick leave.
   (10) All services needed to maintain antiseptic conditions at
stoma or shunt sites on the body.
   (11) Emergency and nonemergency medical transportation.
   (12) Medical supplies.
   (13) Medical equipment, including, but not limited to, scales,
gurneys, and equipment racks suitable for paralyzed patients.
   (14) Utility use directly attributable to the requirements of home
care activities which are in addition to normal utility use.
   (15) Special drugs and medications.
   (16) Home health agency supervision of visiting staff which is
medically necessary, but not included in the home health agency rate.

   (17) Therapy services.
   (18) Household appliances and household utensil costs directly
attributable to home care activities.
   (19) Modification of medical equipment for home use.
   (20) Training and orientation for use of life support systems,
including, but not limited to, support of respiratory functions.
   (21) Respiratory care practitioner services as defined in Sections
3702 and 3703 of the Business and Professions Code, subject to
prescription by a physician and surgeon.
   Beneficiaries receiving in-home medical care services are entitled
to the full range of services within the Medi-Cal scope of benefits
as defined by this section, subject to medical necessity and
applicable utilization control.  Services provided pursuant to this
subdivision, which are not otherwise included in the Medi-Cal
schedule of benefits, shall be available only to the extent that
federal financial participation for these services
                         is available in accordance with a home- and
community-based services waiver.
   (t) Home- and community-based services approved by the United
States Department of Health and Human Services may be covered to the
extent that federal financial participation is available for those
services under waivers granted in accordance with Section 1396n of
Title 42 of the United States Code.  The director may seek waivers
for any or all home- and community-based services approvable under
Section 1396n of Title 42 of the United States Code.  Coverage for
those services shall be limited by the terms, conditions, and
duration of the federal waivers.
   The department shall submit a report, as provided in Section 28 of
the 1982 Budget Act, 30 days prior to providing these services as
Medi-Cal benefits.  The report shall be submitted to the Joint
Legislative Budget Committee and the fiscal committees and shall
address the cost effectiveness of services provided pursuant to this
subdivision.
   (u) Comprehensive perinatal services, as provided through an
agreement with a health care provider designated in Section 14134.5
and meeting the standards developed by the department pursuant to
Section 14134.5, subject to utilization controls.
   The department shall seek any federal waivers necessary to
implement the provisions of this subdivision.  The provisions for
which appropriate federal waivers cannot be obtained shall not be
implemented.  Provisions for which waivers are obtained or for which
waivers are not required shall be implemented notwithstanding any
inability to obtain federal waivers for the other provisions.  No
provision of this subdivision shall be implemented unless matching
funds from Subchapter XIX (commencing with Section 1396) of Chapter 7
of Title 42 of the United States Code are available.
   (v) Early and periodic screening, diagnosis, and treatment for any
individual under 21 years of age is covered, consistent with the
requirements of Subchapter XIX (commencing with Section 1396) of
Chapter 7 of Title 42 of the United States Code.
   (w) Hospice service which is Medicare-certified hospice service is
covered, subject to utilization controls.  Coverage shall be
available only to the extent that no additional net program costs are
incurred.
   (x) When a claim for treatment provided to a beneficiary includes
both services which are authorized and reimbursable under this
chapter, and services which are not reimbursable under this chapter,
that portion of the claim for the treatment and services authorized
and reimbursable under this chapter shall be payable.
   (y) Home- and community-based services approved by the United
States Department of Health and Human Services for beneficiaries with
a diagnosis of AIDS or ARC, who require intermediate care or a
higher level of care.
   Services provided pursuant to a waiver obtained from the Secretary
of the United States Department of Health and Human Services
pursuant to this subdivision, and which are not otherwise included in
the Medi-Cal schedule of benefits, shall be available only to the
extent that federal financial participation for these services is
available in accordance with the waiver, and subject to the terms,
conditions, and duration of the waiver.  These services shall be
provided to individual beneficiaries in accordance with the client's
needs as identified in the plan of care, and subject to medical
necessity and applicable utilization control.
   The director may under this section contract with organizations
qualified to provide, directly or by subcontract, services provided
for in this subdivision to eligible beneficiaries.  Contracts or
agreements entered into pursuant to this division shall not be
subject to the Public Contract Code.
   (z) Respiratory care when provided in organized health care
systems as defined in Section 3701 of the Business and Professions
Code, and as an in-home medical service as outlined in subdivision
(s).
   (aa) (1) There is hereby established in the department, a program
to provide comprehensive clinical family planning services to any
person who has a family income at or below 200 percent of the federal
poverty level, as revised annually, and who is eligible to receive
these services pursuant to the waiver identified in paragraph (2).
This program shall be known as the Family Planning, Access, Care, and
Treatment (Family PACT) Waiver Program.
   (2) The department shall seek a waiver for a program to provide
comprehensive clinical family planning services as described in
paragraph (8).  The program shall be operated only in accordance with
the waiver and the statutes and regulations in paragraph (4) and
subject to the terms, conditions, and duration of the waiver.  The
services shall be provided under the program only if the waiver is
approved by the federal Health Care Financing Administration in
accordance with Section 1396n of Title 42 of the United States Code
and only to the extent that federal financial participation is
available for the services.
   (3) Solely for the purposes of the waiver and notwithstanding any
other provision of law, the collection and use of an individual's
social security number shall be necessary only to the extent required
by federal law.
   (4) Sections 14105.3 to 14105.39, inclusive, 14107.11, 24005, and
24013, and any regulations adopted under these statutes shall apply
to the program provided for under this subdivision.  No other
provision of law under the Medi-Cal program or the State-Only Family
Planning Program shall apply to the program provided for under this
subdivision.
   (5) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement, without taking regulatory action, the
provisions of the waiver after its approval by the federal Health
Care Financing Administration and the provisions of this section by
means of an all-county letter or similar instruction to providers.
Thereafter, the department shall adopt regulations to implement this
section and the approved waiver in accordance with the requirements
of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
3 of Title 2 of the Government Code.  Beginning six months after the
effective date of the act adding this subdivision, the department
shall provide a status report to the Legislature on a semiannual
basis until regulations have been adopted.
   (6) In the event that the Department of Finance determines that
the program operated under the authority of the waiver described in
paragraph (2) is no longer cost-effective, this subdivision shall
become inoperative on the first day of the first month following the
issuance of a 30-day notification of that determination in writing by
the Department of Finance to the chairperson in each house that
considers appropriations, the chairpersons of the committees, and the
appropriate subcommittees in each house that considers the State
Budget, and the Chairperson of the Joint Legislative Budget
Committee.
   (7) If this subdivision ceases to be operative, all persons who
have received or are eligible to receive comprehensive clinical
family planning services pursuant to the waiver described in
paragraph (2) shall receive family planning services under the
Medi-Cal program pursuant to subdivision (n) if they are otherwise
eligible for Medi-Cal with no share of cost, or shall receive
comprehensive clinical family planning services under the program
established in Division 24 (commencing with Section 24000) either if
they are eligible for Medi-Cal with a share of cost or if they are
otherwise eligible under Section 24003.
   (8) For purposes of this subdivision, "comprehensive clinical
family planning services" means the process of establishing
objectives for the number and spacing of children, and selecting the
means by which those objectives may be achieved.  These means include
a broad range of acceptable and effective methods and services to
limit or enhance fertility, including contraceptive methods, federal
Food and Drug Administration approved contraceptive drugs, devices,
and supplies, natural family planning, abstinence methods, and basic,
limited fertility management.  Comprehensive clinical family
planning services include, but are not limited to, preconception
counseling, maternal and fetal health counseling, general
reproductive health care, including diagnosis and treatment of
infections and conditions, including cancer, that threaten
reproductive capability, medical family planning treatment and
procedures, including supplies and followup, and informational,
counseling, and educational services.  Comprehensive clinical family
planning services shall not include abortion, pregnancy testing
solely for the purposes of referral for abortion or services
ancillary to abortions, or pregnancy care that is not incident to the
diagnosis of pregnancy.  Comprehensive clinical family planning
services shall be subject to utilization control and include all of
the following:
   (A) Family planning related services and male and female
sterilization.  Family planning services for men and women shall
include emergency services and services for complications directly
related to the contraceptive method, federal Food and Drug
Administration approved contraceptive drugs, devices, and supplies,
and followup, consultation, and referral services, as indicated,
which may require treatment authorization requests.
   (B) All United States Department of Agriculture, federal Food and
Drug Administration approved contraceptive drugs, devices, and
supplies that are in keeping with current standards of practice and
from which the individual may choose.
   (C) Culturally and linguistically appropriate health education and
counseling services, including informed consent, that include all of
the following:
   (i) Psychosocial and medical aspects of contraception.
   (ii) Sexuality.
   (iii) Fertility.
   (iv) Pregnancy.
   (v) Parenthood.
   (vi) Infertility.
   (vii) Reproductive health care.
   (viii) Preconception and nutrition counseling.
   (ix) Prevention and treatment of sexually transmitted infection.
   (x) Use of contraceptive methods, federal Food and Drug
Administration approved contraceptive drugs, devices, and supplies.
   (xi) Possible contraceptive consequences and followup.
   (xii) Interpersonal communication and negotiation of relationships
to assist individuals and couples in effective contraceptive method
use and planning families.
   (D) A comprehensive health history, updated at next periodic visit
(between 11 and 24 months after initial examination) that includes a
complete obstetrical history, gynecological history, contraceptive
history, personal medical history, health risk factors, and family
health history, including genetic or hereditary conditions.
   (E) A complete physical examination on initial and subsequent
periodic visits.
  SEC. 65.  Section 14132.22 of the Welfare and Institutions Code is
amended to read:
   14132.22.  (a) (1) Transitional inpatient care services, as
described in this section and provided by a qualified health
facility, is a covered benefit under this chapter, subject to
utilization controls and subject to the availability of federal
financial participation.  These services shall be available to
individuals needing short-term medically complex or intensive
rehabilitative services, or both.
   (2) The department shall seek any necessary approvals from the
federal Health Care Financing Administration to ensure that
transitional inpatient care services, when provided by a general
acute care hospital, will be considered for purposes of determining
whether a hospital is deemed to be a disproportionate share hospital
pursuant to Section 1396r-4(b) of Title 42 of the United States Code
or any successor statute.
   (3) Transitional inpatient care services shall be available to
Medi-Cal beneficiaries who do not meet the criteria for eligibility
for the subacute program provided for pursuant to Section 14132.25,
but who need more medically complex and intensive rehabilitative
services than are generally available in a skilled nursing facility,
and who are clinically stable and no longer need the level of
diagnostic and ancillary services provided generally in an acute care
facility.
   (b) For purposes of this section, "transitional inpatient care"
means the level of care needed by an individual who has suffered an
illness, injury, or exacerbation of a disease, and whose medical
condition has clinically stabilized so that daily physician services
and the immediate availability of technically complex diagnostic and
invasive procedures usually available only in the acute care hospital
are not medically necessary, and when the physician assuming the
responsibility of treatment management of the patient in transitional
care has developed a definitive and time-limited course of
treatment.  The individual's care needs may be medical,
rehabilitative, or both.  However, the individual shall fall within
one of the two following patient groups:
   (1) "Transitional medical patient," which means a medically stable
patient with short-term transitional care needs, whose primary
barrier to discharge to a residential setting is medical status
rather than functional status.  These patients may require simple
rehabilitation therapy, but not a rehabilitation program appropriate
for multiple interrelated areas of functional disability.
   (2) "Transitional rehabilitation patient," which means a medically
stable patient with short-term transitional care needs, whose
primary barrier to discharge to a residential setting is functional
status, rather than medical status, and who has the capacity to
benefit from a rehabilitation program as determined by a physiatrist
or physician otherwise skilled in rehabilitation medicine.  These
patients may have unresolved medical problems, but these problems
must be sufficiently controlled to allow participation in the
rehabilitation program.
   (c) In implementing the transitional inpatient care program the
department shall consider the differences between the two patient
groups described in paragraphs (1) and (2) of subdivision (b) and
shall assure that each group's specific health care needs are met.
   (d) Transitional inpatient care services shall be made available
only to qualifying Medi-Cal beneficiaries who are 18 years of age or
older.
   (e) Transitional inpatient care services shall not be available to
patients in acute care hospitals defined as small and rural pursuant
to Section 124840 of the Health and Safety Code.
   (f) (1) Transitional inpatient care services may be provided by
general acute care hospitals that are licensed pursuant to Chapter 2
(commencing with Section 1250) of Division 2 of the Health and Safety
Code.  General acute care hospitals may provide transitional
inpatient care services in the acute care hospital, an acute
rehabilitation center, or the distinct part skilled nursing unit of
the acute care hospital.  Licensed skilled nursing facilities, as
defined in subdivision (c) of Section 1250 of the Health and Safety
Code that are certified to participate as a nursing facility in the
Medicare and medicaid programs, pursuant to Titles XVIII and XIX of
the federal Social Security Act, and licensed congregate living
health facilities, as defined in Section 1265.7 of the Health and
Safety Code, that are certified to participate as a nursing facility
in the Medicare and medicaid programs pursuant to Titles XVIII and
XIX of the federal Social Security Act, may also provide the services
described in subdivision (b).
   (2) Costs of providing transitional inpatient care services in
nonsegregated parts of the distinct part skilled nursing unit of the
acute care hospital shall be determinable, in the absence of distinct
and separate cost centers established for this purpose.  Costs of
providing transitional inpatient care services in nondistinct parts
of the acute care hospital shall be determinable, in the absence of
distinct and separate cost centers established for this purpose.  A
separate and distinct cost center shall be maintained or established
for each unit in freestanding certified nursing facilities in which
the services described in subdivision (b) are provided, in order to
identify and segregate costs for transitional inpatient care patients
from costs for other patients who may be served within the parent
facility.
   (g) In order to participate as a provider in the transitional
inpatient care program, a facility shall meet all applicable
standards necessary for participation in the Medi-Cal program and all
of the following:
   (1) If the health facility is a freestanding certified nursing
facility, it shall be located in close proximity to a general acute
care hospital with which the facility has a transfer agreement in
order to support the capability to respond to medical emergencies.
   (2) The health facility shall demonstrate, to the department,
competency in providing high quality care to all patients for whom
the facility provides care, experience in providing high quality care
to the types of transitional inpatient care patients the facility
proposes to serve, and the ability to provide transitional inpatient
care to patients pursuant to this chapter.
   (3) The health facility shall enter into a provider agreement with
the department for the provision of transitional inpatient care.
The provider agreement shall specify whether the facility is
authorized to serve transitional medical patients or transitional
rehabilitation patients or both, depending on the facility's
demonstrated ability to meet standards specific to each patient
group.  Continuation of the provider agreement shall be contingent
upon the facility's continued compliance with all the applicable
requirements of this section and any other applicable laws or
regulations.
   (h) In determining a facility's qualifications for initial
participation, an onsite review shall be conducted by the department.
  Subsequent review shall be conducted onsite as necessary, but not
less frequently than annually.  Initial and subsequent reviews shall
be conducted by appropriate department personnel, which shall include
a registered nurse and other health professionals where appropriate.
  The department shall develop written protocols for reviews.
   (i) Transitional inpatient care services shall be available to
patients receiving care in an acute care hospital.  Under specified
circumstances, as set forth in regulations, transitional inpatient
care shall be available to patients transferring directly from a
nursing facility level of care, a physician's office, a clinic, or
from the emergency room of a general acute care hospital, provided
they have received a comprehensive medical assessment conducted by a
physician, and the physician determines, and documents in the medical
record, that the patient has been clinically stable for the 24 hours
preceding admission to the transitional inpatient care program.
   (j) A health facility providing transitional inpatient care shall
accept and retain only those patients for whom it can provide
adequate, safe, therapeutic, and effective care, and as identified in
its application for participation as a transitional inpatient care
provider.  The facility's determination to accept a patient into the
transitional inpatient care unit shall be based on its preadmission
screening process conducted by appropriate facility personnel.
   (k) The department shall establish a process for providing timely,
concurrent authorization and coordination, as required, of all
medically necessary services for transitional inpatient care.
   (l) The department shall adopt regulations specifying admission
criteria and an admission process appropriate to each of the
transitional inpatient care patient groups specified in subdivision
(b).  Patient admission criteria to transitional inpatient care shall
include, but not be limited to, the following:
   (1) Prior to admission to transitional inpatient care, the patient
shall be determined to have been clinically stable for the preceding
24 hours by the attending physician and the physician assuming the
responsibility of treatment management of the patient in the
transitional inpatient care program.
   (2) The patient shall be admitted to transitional inpatient care
on the order of the physician assuming the responsibility of the
management of the patient, with an established diagnosis, and an
explicit time-limited course of treatment of sufficient detail to
allow the facility to initiate appropriate assessments and services.
No patient shall be transferred from an acute care hospital to a
transitional inpatient care program that is in a freestanding
certified nursing facility if the patient's attending physician
documents in the medical record that the transfer would cause
physical or psychological harm to the patient.
   (3) (A) Medical necessity for transitional care shall include, but
not be limited to, one or more of the following:
   (i) Intravenous therapy.
   (ii) Rehabilitative services.
   (iii) Wound care.
   (iv) Respiratory therapy.
   (v) Traction.
   (B) The department shall develop regulations further defining the
services to be provided pursuant to clauses (i) to (v), inclusive,
and the circumstances under which these services shall be provided.
   (m) Registered nurses shall be assigned to the transitional
inpatient care unit at all times and in sufficient numbers to allow
for the ongoing patient assessment, patient care, and supervision of
licensed and unlicensed staff.  Participating facilities shall assure
that staffing is adequate in number and skill mix, at all times, to
address reasonably anticipated admissions, discharges, transfers,
patient emergencies, and temporary absences of staff from the
transitional care unit including, but not limited to, absences to
attend meetings or inservice training.  All licensed and certified
health care personnel shall hold valid, current licensure or
certification.
   (n) Continued medical assessments shall be of sufficient frequency
as to adequately review, evaluate, and alter plans of care as needed
in response to patients' medical progress.
   (o) The department shall develop a rate of reimbursement for
transitional inpatient care services for providers as specified in
subdivision (f).  Reimbursement rates shall be specified in
regulation and in accordance with methodologies developed by the
department and may include the following:
   (1) All inclusive per diem rates.
   (2) Individual patient specific rates according to the needs of
the individual transitional care patient.
   (3) Other rates subject to negotiation with the health facility.
   (p) Reimbursement at transitional inpatient care rates shall only
be implemented when funds are available for this purpose pursuant to
the annual Budget Act.  Funds expended to implement this section
shall be used by providers to assure safe, therapeutic and effective
patient care by staffing at levels which meet patients' needs, and to
ensure that these providers have the needed resources and staff to
provide quality care to transitional inpatient care patients.
   (q) (1) The department shall reimburse physicians for all
medically necessary care provided to transitional inpatient care
patients and shall establish Medi-Cal physician reimbursement rates
commensurate with those for visits to nontransitional acute care
patients in acute care hospitals.
   (2) It is the intent of this subdivision to cover physician costs
not included in the per diem rate.
   (r) No later than January 1, 2000, the department shall evaluate,
and make recommendations regarding, the effectiveness and safety of
the transitional inpatient care program.  The evaluation shall be
developed in consultation with representatives of providers, facility
employees, and consumers.  The department may contract for all or a
portion of the evaluation.  The evaluation shall be for the purpose
of determining the impact of the transitional inpatient care program
on patient care, including functional outcomes, if applicable, on
whether the care costs less than other alternatives, and whether it
results in the deterioration of patient health and safety as compared
to other placements.  The evaluation shall also be for the purpose
of determining the effect on patients other than those receiving
transitional inpatient care in participating facilities.  The
evaluation shall include:
   (1) Data on patient mortality, patients served, length of stay,
and subsequent placement or discharge.
   (2) Data on readmission to acute care and emergency room
transfers.
   (3) Staffing standards in the facilities.
   (4) Other outcome measures and indicia of patient health and
safety otherwise required to be reported by federal or state law.
   (s) The department shall develop regulations to amend Sections
51540 to 51556, inclusive, of Title 22 of the California Code of
Regulations, to exclude the cost of transitional inpatient care
services rendered in general acute care hospitals from the hospital's
inpatient services reimbursement.
   (t) The department may adopt emergency regulations as necessary to
implement this section in accordance with the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code).  The initial
adoption of emergency regulations shall be deemed to be an emergency
and considered by the Office of Administrative Law as necessary for
the immediate preservation of public peace, health and safety, or
general welfare.  Emergency regulations adopted pursuant to this
section shall remain in effect for no more than 180 days.  If the
department adopts emergency regulations to implement this section,
the department shall obtain input from interested parties to address
the unique needs of medically complex and intensive rehabilitative
patients qualifying for transitional inpatient care.  Notwithstanding
the requirements of this section, the department shall, if it adopts
emergency regulations to implement this section, address the
following major subject areas:
   (1) Patient selection and assessment criteria, including but not
limited to, preadmission screening, patient assessments, physician
services, and interdisciplinary teams.
   (2) Facility participation criteria and agreements, including but
not limited to, facility licensing and certification history,
demonstration to the department of a preexisting history in providing
care to medically complex or intensive rehabilitative patients, data
reporting requirements, demonstration of continued ability
                                         to provide high quality of
care to all patients, nurse staffing requirements, ancillary
services, and staffing requirements.
   (u) This section shall remain in effect only until January 1,
2001, and as of that date is repealed, unless a later enacted
statute, that is enacted on or before January 1, 2001, deletes or
extends that date.
  SEC. 67.  Section 14163 of the Welfare and Institutions Code is
amended to read:
   14163.  (a) For purposes of this section, the following
definitions shall apply:
   (1) "Public entity" means a county, a city, a city and county, the
State of California, the University of California, a local health
care district, a local health authority, or any other political
subdivision of the state.
   (2) "Hospital" means a health facility that is licensed pursuant
to Chapter 2 (commencing with Section 1250) of Division 2 of the
Health and Safety Code to provide acute inpatient hospital services,
and includes all components of the facility.
   (3) "Disproportionate share hospital" means a hospital providing
acute inpatient services to Medi-Cal beneficiaries that meets the
criteria for disproportionate share status relating to acute
inpatient services set forth in Section 14105.98.
   (4) "Disproportionate share list" means the annual list of
disproportionate share hospitals for acute inpatient services issued
by the department pursuant to Section 14105.98.
   (5) "Fund" means the Medi-Cal Inpatient Payment Adjustment Fund.
   (6) "Eligible hospital" means, for a particular state fiscal year,
a hospital on the disproportionate share list that is eligible to
receive payment adjustment amounts under Section 14105.98 with
respect to that state fiscal year.
   (7) "Transfer year" means the particular state fiscal year during
which, or with respect to which, public entities are required by this
section to make an intergovernmental transfer of funds to the
Controller.
   (8) "Transferor entity" means a public entity that, with respect
to a particular transfer year, is required by this section to make an
intergovernmental transfer of funds to the Controller.
   (9) "Transfer amount" means an amount of intergovernmental
transfer of funds that this section requires for a particular
transferor entity with respect to a particular transfer year.
   (10) "Intergovernmental transfer" means a transfer of funds from a
public entity to the state, that is local government financial
participation in Medi-Cal pursuant to the terms of this section.
   (11) "Licensee" means an entity that has been issued a license to
operate a hospital by the department.
   (12) "Annualized Medi-Cal inpatient paid days" means the total
number of Medi-Cal acute inpatient hospital days, regardless of dates
of service, for which payment was made by or on behalf of the
department to a hospital, under present or previous ownership, during
the most recent calendar year ending prior to the beginning of a
particular transfer year, including all Medi-Cal acute inpatient
covered days of care for hospitals that are paid on a different basis
than per diem payments.
   (13) "Medi-Cal acute inpatient hospital day" means any acute
inpatient day of service attributable to patients who, for those
days, were eligible for medical assistance under the California state
plan, including any day of service that is reimbursed on a basis
other than per diem payments.
   (14) "OBRA 1993 payment limitation" means the hospital-specific
limitation on the total annual amount of payment adjustments to each
eligible hospital under the payment adjustment program that can be
made with federal financial participation under Section 1396r-4(g) of
Title 42 of the United States Code as implemented pursuant to the
Medi-Cal State Plan.
   (b) The Medi-Cal Inpatient Payment Adjustment Fund is hereby
created in the State Treasury.  Notwithstanding Section 13340 of the
Government Code, the fund shall be continuously appropriated to, and
under the administrative control of, the department for the purposes
specified in subdivision (d).  The fund shall consist of the
following:
   (1) Transfer amounts collected by the Controller under this
section, whether submitted by transferor entities pursuant to
applicable provisions of this section or obtained by offset pursuant
to subdivision (j).
   (2) Any other intergovernmental transfers deposited in the fund,
as permitted by Section 14164.
   (3) Any interest that accrues with respect to amounts in the fund.

   (c) Moneys in the fund, which shall not consist of any state
general funds, shall be used as the source for the nonfederal share
of payments to hospitals pursuant to Section 14105.98.  Moneys shall
be allocated from the fund by the department and matched by federal
funds in accordance with customary Medi-Cal accounting procedures,
and used to make payments pursuant to Section 14105.98.
   (d) Except as otherwise provided in Section 14105.98 or in any
provision of law appropriating a specified sum of money to the
department for administering this section and Section 14105.98,
moneys in the fund shall be used only for the following:
   (1) Payments to hospitals pursuant to Section 14105.98.
   (2) Transfers to the Health Care Deposit Fund as follows:
   (A) In the amount of two hundred thirty-nine million seven hundred
fifty-seven thousand six hundred ninety dollars ($239,757,690) for
the 1994-95 and 1995-96 fiscal years.
   (B) In the amount of two hundred twenty-nine million seven hundred
fifty-seven thousand six hundred ninety dollars ($229,757,690) for
the 1996-97 fiscal year.
   (C) In the amount of one hundred fifty-four million seven hundred
fifty-seven thousand six hundred ninety dollars ($154,757,690) for
the 1997-98 fiscal year.
   (D) In the amount of one hundred fourteen million seven hundred
fifty-seven thousand six hundred ninety dollars ($114,757,690) for
the 1998-99 fiscal year.
   (E) (i) In the amount of eighty-four million seven hundred
fifty-seven thousand six hundred ninety dollars ($84,757,690) for the
1999-2000 fiscal year and each fiscal year thereafter.
   (ii) It is the intent of the Legislature that the economic benefit
of any reduction in the amount transferred, or to be transferred, to
the Health Care Deposit Fund pursuant to this subdivision for the
1999-2000 fiscal year, as compared to the amount so transferred for
the 1998-99 fiscal year, be allocated equally between public and
nonpublic disproportionate share hospitals.  To implement the
reduction in clause (i) the department shall, by June 30, 2000,
adjust the calculations in Section 14105.98 in order to allocate the
funds in accordance with this clause.
   (F) The transfers from the fund shall be made in six equal monthly
installments to the Medi-Cal local assistance appropriation item
(Item 4260-101-001 of the annual Budget Act) in support of Medi-Cal
expenditures.  The first installment shall accrue in October of each
transfer year, and all other installments shall accrue monthly
thereafter from November through March.
   (e) For the 1991-92 state fiscal year, the department shall
determine, no later than 70 days after the enactment of this section,
the transferor entities for the 1991-92 transfer year.  To make this
determination, the department shall utilize the disproportionate
share list for the 1991-92 fiscal year issued by the department
pursuant to paragraph (1) of subdivision (f) of Section 14105.98.
The department shall identify each eligible hospital on the list for
which a public entity is the licensee as of July 1, 1991.  The public
entity that is the licensee of each identified eligible hospital
shall be a transferor entity for the 1991-92 transfer year.
   (f) The department shall determine, no later than 70 days after
the enactment of this section, the transfer amounts for the 1991-92
transfer year.
   The transfer amounts shall be determined as follows:
   (1) The eligible hospitals for 1991-92 shall be identified.  For
each hospital, the applicable total per diem payment adjustment
amount under Section 14105.98 for the 1991-92 transfer year shall be
computed.  This amount shall be multiplied by 80 percent of the
eligible hospital's annualized Medi-Cal inpatient paid days as
determined from all Medi-Cal paid claims records available through
April 1, 1991.  The products of these calculations for all eligible
hospitals shall be added together to determine an aggregate sum for
the 1991-92 transfer year.
   (2) The eligible hospitals for 1991-92 involving transferor
entities as licensees shall be identified.  For each hospital, the
applicable total per diem payment adjustment amount under Section
14105.98 for the 1991-92 transfer year shall be computed.  This
amount shall be multiplied by 80 percent of the eligible hospital's
annualized Medi-Cal inpatient paid days as determined from all
Medi-Cal paid claims records available through April 1, 1991.  The
products of these calculations for all eligible hospitals with
transferor entities as licensees shall be added together to determine
an aggregate sum for the 1991-92 transfer year.
   (3) The aggregate sum determined under paragraph (1) shall be
divided by the aggregate sum determined under paragraph (2), yielding
a factor to be utilized in paragraph (4).
   (4) The factor determined in paragraph (3) shall be multiplied by
the amount determined for each hospital under paragraph (2).  The
product of this calculation for each hospital in paragraph (2) shall
be divided by 1.771, yielding a transfer amount for the particular
transferor entity for the transfer year.
   (g) For the 1991-92 transfer year, the department shall notify
each transferor entity in writing of its applicable transfer amount
or amounts.
   (h) For the 1992-93 transfer year and subsequent transfer years,
transfer amounts shall be determined in the same procedural manner as
set forth in subdivision (f), except:
   (1) The department shall use all of the following:
   (A) The disproportionate share list applicable to the particular
transfer year to determine the eligible hospitals.
   (B) The payment adjustment amounts calculated under Section
14105.98 for the particular transfer year.  These amounts shall take
into account any projected or actual increases or decreases in the
size of the payment adjustment program as are required under Section
14105.98 for the particular year in question, including any decreases
resulting from the application of the OBRA 1993 payment limitation.
The department may issue interim, revised, and supplemental transfer
requests as necessary and appropriate to address changes in payment
adjustment levels that occur under Section 14105.98.  All transfer
requests, or adjustments thereto, issued to transferor entities by
the department shall meet the requirements set forth in subdivision
(i).
   (C) Data regarding annualized Medi-Cal inpatient paid days for the
most recent calendar year ending prior to the beginning of the
particular transfer year, as determined from all Medi-Cal paid claims
records available through April 1 preceding the particular transfer
year.
   (D) The status of public entities as licensees of eligible
hospitals as of July 1 of the particular transfer year.
   (E) For the 1993-94 transfer year and subsequent transfer years,
the divisor to be used for purposes of the calculation referred to in
paragraph (4) of subdivision (f) shall be determined by the
department. The divisor shall be calculated to ensure that the
appropriate amount of transfers from transferor entities are received
into the fund to satisfy the requirements of Section 14105.98,
exclusive of the amounts described in paragraph (2) of this
subdivision, and to satisfy the requirements of paragraph (2) of
subdivision (d), for the particular transfer year.  For the 1993-94
transfer year, the divisor shall be 1.742.
   (F) The following provisions shall apply for certain transfer
amounts relating to nonsupplemental payments under Section 14105.98:

   (i) For the 1998-99 transfer year, transfer amounts shall be
determined as though the payment adjustment amounts arising pursuant
to subdivision (ag) of Section 14105.98 were increased by the amounts
paid or payable pursuant to subdivision (af) of Section 14105.98.
   (ii) Any transfer amounts paid by a transferor entity pursuant to
subparagraph (C) of paragraph (2) shall serve as credit for the
particular transferor entity against an equal amount of its transfer
obligation for the 1998-99 transfer year.
   (iii) For the 1999-2000 transfer year, transfer amounts shall be
determined as though the amount to be transferred to the Health Care
Deposit Fund, as referred to in paragraph (2) of subdivision (d),
were reduced by 28 percent.
   (2) (A) Except as provided in subparagraphs (B), (C), and (D), for
the 1993-94 transfer year and subsequent transfer years, transfer
amounts shall be increased for the particular transfer year in the
amounts necessary to fund the nonfederal share of the total
supplemental payment adjustment amounts of all types that arise under
Section 14105.98.  These increases shall be paid only by those
transferor entities that are licensees of hospitals that are
projected to receive some or all of the particular supplemental
payments, and the increases shall be paid by the transferor entities
on a pro rata basis in connection with the particular supplemental
payments.  For purposes of this paragraph, supplemental payment
adjustment amounts shall be deemed to arise for the particular
transfer year as of the date specified in Section 14105.98.  Transfer
amounts to fund the nonfederal share of the payments shall be paid
for the particular transfer year within 20 days after the department
notifies the transferor entity in writing of the additional transfer
amount to be paid.
   (B) For the 1995-96 transfer year, the nonfederal share of the
secondary supplemental payment adjustments described in paragraph (9)
of subdivision (y) of Section 14105.96 shall be funded as follows:
   (i) Ninety-nine percent of the nonfederal share shall be funded by
a transfer from the University of California.
   (ii) One percent of the nonfederal share shall be funded by
transfers from those public entities that are the licensees of the
hospitals included in the "other public hospitals" group referred to
in clauses (ii) and (iii) of subparagraph (B) of paragraph (9) of
subdivision (y) of Section 14105.98.  The transfer responsibilities
for this 1 percent shall be allocated to the particular public
entities on a pro rata basis, based on a formula or formulae
customarily used by the department for allocating transfer amounts
under this section.  The formula or formulae shall take into account,
through reallocation of transfer amounts as appropriate, the
situation of hospitals whose secondary supplemental payment
adjustments are restricted due to the application of the limitation
set forth in clause (v) of subparagraph (B) of paragraph (9) of
subdivision (y) of Section 14105.98.
   (iii) All transfer amounts under this subparagraph shall be paid
by the particular transferor entities within 30 days after the
department notifies the transferor entity in writing of the transfer
amount to be paid.
   (C) For the 1997-98 transfer year, transfer amounts to fund the
nonfederal share of the supplemental payment adjustments described in
subdivision (af) of Section 14105.98 shall be funded by a transfer
from the County of Los Angeles.
   (D) (i) For the 1998-99 transfer year, transfer amounts to fund
the nonfederal share of the supplemental payment adjustment amounts
arising under subdivision (ah) of Section 14105.98 shall be increased
as set forth in clause (ii).
   (ii) The transfer amounts otherwise calculated to fund the
supplemental payment adjustments referred to in clause (i) shall be
increased on a pro rata basis by an amount equal to 28 percent of the
amount to be transferred to the Health Care Deposit Fund for the
1999-2000 fiscal year, as referred to in paragraph (2) of subdivision
(d).
   (3) The department shall prepare preliminary analyses and
calculations regarding potential transfer amounts, and potential
transferor entities shall be notified by the department of estimated
transfer amounts as soon as reasonably feasible regarding any
particular transfer year.  Written notices of transfer amounts shall
be issued by the department as soon as possible with respect to each
transfer year.  All state agencies shall take all necessary steps in
order to supply applicable data to the department to accomplish these
tasks.  The Office of Statewide Health Planning and Development
shall provide to the department quarterly access to the edited and
unedited confidential patient discharge data files for all Medi-Cal
eligible patients.  The department shall maintain the confidentiality
of that data to the same extent as is required of the Office of
Statewide Health Planning and Development.  In addition, the Office
of Statewide Health Planning and Development shall provide to the
department, not later than March 1 of each year, the data specified
by the department, as the data existed on the statewide data base
file as of February 1 of each year, from all of the following:
   (A) Hospital annual disclosure reports, filed with the Office of
Statewide Health Planning and Development pursuant to Section 443.31
or 128735 of the Health and Safety Code, for hospital fiscal years
that ended during the calendar year ending 13 months prior to the
applicable February 1.
   (B) Annual reports of hospitals, filed with the Office of
Statewide Health Planning and Development pursuant to Section 439.2
or 127285 of the Health and Safety Code, for the calendar year ending
13 months prior to the applicable February 1.
   (C) Hospital patient discharge data reports, filed with the Office
of Statewide Health Planning and Development pursuant to subdivision
(g) of Section 443.31 or 128735 of the Health and Safety Code, for
the calendar year ending 13 months prior to the applicable February
1.
   (D) Any other materials on file with the Office of Statewide
Health Planning and Development.
   (4) Transfer amounts calculated by the department may be increased
or decreased by a percentage amount consistent with the Medi-Cal
state plan.
   (5) For the 1993-94 fiscal year, the transfer amount that would
otherwise be required from the University of California shall be
increased by fifteen million dollars ($15,000,000).
   (6) Notwithstanding any other provision of law, except for
subparagraph (D) of paragraph (2), the total amount of transfers
required from the transferor entities for any particular transfer
year shall not exceed the sum of the following:
   (A) The amount needed to fund the nonfederal share of all payment
adjustment amounts applicable to the particular payment adjustment
year as calculated under Section 14105.98.  Included in the
calculations for this purpose shall be any decreases in the program
as a whole, and for individual hospitals, that arise due to the
provisions of Section 1396r-4(f) or (g) of Title 42 of the United
States Code.
   (B) The amount needed to fund the transfers to the Health Care
Deposit Fund, as referred to in subdivision (d).
   (7) (A) Except as provided in subparagraphs (B) and (C) and in
paragraph (2) of subdivision (j), and except for a prudent reserve
not to exceed two million dollars ($2,000,000) in the Medi-Cal
Inpatient Payment Adjustment Fund, any amounts in the fund, including
interest that accrues with respect to the amounts in the fund, that
are not expended, or estimated to be required for expenditure, under
Section 14105.98 with respect to a particular transfer year shall be
returned on a pro rata basis to the transferor entities for the
particular transfer year within 120 days after the department
determines that the funds are not needed for an expenditure in
connection with the particular transfer year.
   (B) The department shall determine the interest amounts that have
accrued in the fund from its inception through June 30, 1995, and, no
later than January 1, 1996, shall distribute these interest amounts
to transferor entities:
   (C) With respect to those particular amounts in the fund resulting
solely from the provisions of subparagraph (D) of paragraph (2), the
department shall determine by September 30, 1999, whether these
particular amounts exceed 28 percent of the amount to be transferred
to the Health Care Deposit Fund for the 1999-2000 fiscal year, as
referred to in paragraph (2) of subdivision (d).  Any excess amount
so determined shall be returned to the particular transferor entities
on a pro rata basis no later than October 31, 1999.
   (D) Regarding any funds returned to a transferor entity under
subparagraph (A) or (C), or interest amounts distributed to a
transferor entity under subparagraph (B), the department shall
provide to the transferor entity a written statement that explains
the basis for the particular return or distribution of funds and
contains the general calculations used by the department in
determining the amount of the particular return or distribution of
funds.
   (i) (1) For the 1991-92 transfer year, each transferor entity
shall pay its transfer amount or amounts to the Controller, for
deposit in the fund, in eight equal installments.
   (2) (A) Except as provided in subparagraphs (B) and (C), for the
1992-93 transfer year and subsequent transfer years, each transferor
entity shall pay its transfer amount or amounts to the Controller,
for deposit in the fund, in eight equal installments.  However, for
the 1997-98 and subsequent transfer years, each transferor entity
shall pay its transfer amount or amounts to the Controller, for
deposit in the fund, in the form of periodic installments according
to a timetable established by the department.  The timetable shall be
structured to effectuate, on a reasonable basis, the prompt
distribution of all nonsupplemental payment adjustments under Section
14105.98, and transfers to the Health Care Deposit Fund under
subdivision (d).
   (B) For the 1994-95 transfer year, each transferor entity shall
pay its transfer amount or amounts to the Controller, for deposit in
the fund, in five equal installments.
   (C) For the 1995-96 transfer year, each transferor entity shall
pay its transfer amount or amounts to the Controller, for deposit in
the fund, in five equal installments.
   (D) Except as otherwise specifically provided, subparagraphs (A)
to (C), inclusive, shall not apply to increases in transfer amounts
described in paragraph (2) of subdivision (h) or to additional
transfer amounts described in subdivision (o).
   (E) All requests for transfer payments, or adjustments thereto,
issued by the department shall be in writing and shall include (i) an
explanation of the basis for the particular transfer request or
transfer activity, (ii) a summary description of program funding
status for the particular transfer year, and (iii) the general
calculations used by the department in connection with the particular
transfer request or transfer activity.
   (3) A transferor entity may use any of the following funds for
purposes of meeting its transfer obligations under this section:
   (A) General funds of the transferor entity.
   (B) Any other funds permitted by law to be used for these
purposes, except that a transferor entity shall not submit to the
Controller any federal funds unless those federal funds are
authorized by federal law to be used to match other federal funds.
In addition, no private donated funds from any health care provider,
or from any person or organization affiliated with the health care
provider, shall be channeled through a transferor entity or any other
public entity to the fund, unless the donated funds will qualify
under federal rules as a valid component of the nonfederal share of
the Medi-Cal program and will be matched by federal funds.  The
transferor entity shall be responsible for determining that funds
transferred meet the requirements of this subparagraph.
   (j) (1) If a transferor entity does not submit any transfer amount
within the time period specified in this section, the Controller
shall offset immediately the amount owed against any funds which
otherwise would be payable by the state to the transferor entity.
The Controller, however, shall not impose an offset against any
particular funds payable to the transferor entity where the offset
would violate state or federal law.
   (2) Where a withhold or a recoupment occurs pursuant to the
provisions of paragraph (2) of subdivision (r) of Section 14105.98,
the nonfederal portion of the amount in question shall remain in the
fund, or shall be redeposited in the fund by the department, as
applicable.  The department shall then proceed as follows:
   (A) If the withhold or recoupment was imposed with respect to a
hospital whose licensee was a transferor entity for the particular
state fiscal year to which the withhold or recoupment related, the
nonfederal portion of the amount withheld or recouped shall serve as
a credit for the particular transferor entity against an equal amount
of transfer obligations under this section, to be applied whenever
the transfer obligations next arise.  Should no such transfer
obligation arise within 180 days, the department shall return the
funds in question to the particular transferor entity within 30 days
thereafter.
   (B) For other situations, the withheld or recouped nonfederal
portion shall be subject to paragraph (7) of subdivision (h).
   (k) All transfer amounts received by the Controller or amounts
offset by the Controller shall immediately be deposited in the fund.

   (l) For purposes of this section, the disproportionate share list
utilized by the department for a particular transfer year shall be
identical to the disproportionate share list utilized by the
department for the same state fiscal year for purposes of Section
14105.98.  Nothing on a disproportionate share list, once issued by
the department, shall be modified for any reason other than
mathematical or typographical errors or omissions on the part of the
department or the Office of Statewide Health Planning and Development
in preparation of the list.
   (m) Neither the intergovernmental transfers required by this
section, nor any elective transfer made pursuant to Section 14164,
shall create, lead to, or expand the health care funding or service
obligations for current or future years for any transferor entity,
except as required of the state by this section or as may be required
by federal law, in which case the state shall be held harmless by
the transferor entities on a pro rata basis.
                                                           (n) Except
as otherwise permitted by state and federal law, no transfer amount
submitted to the Controller under this section, and no offset by the
Controller pursuant to subdivision (j), shall be claimed or
recognized as an allowable element of cost in Medi-Cal cost reports
submitted to the department.
   (o) Whenever additional transfer amounts are required to fund the
nonfederal share of payment adjustment amounts under Section 14105.98
that are distributed after the close of the particular payment
adjustment year to which the payment adjustment amounts apply, the
additional transfer amounts shall be paid by the parties who were the
transferor entities for the particular transfer year that was
concurrent with the particular payment adjustment year.  The
additional transfer amounts shall be calculated under the formula
that was in effect during the particular transfer year.  For transfer
years prior to the 1993-94 transfer year, the percentage of the
additional transfer amounts available for transfer to the Health Care
Deposit Fund under subdivision (d) shall be the percentage that was
in effect during the particular transfer year.  These additional
transfer amounts shall be paid by transferor entities within 20 days
after the department notifies the transferor entity in writing of the
additional transfer amount to be paid.
   (p) (1) Ten million dollars ($10,000,000) of the amount
transferred from the Medi-Cal Inpatient Payment Adjustment Fund to
the Health Care Deposit Fund due to amounts transferred attributable
to years prior to the 1993-94 fiscal year is hereby appropriated
without regard to fiscal years to the State Department of Health
Services to be used to support the development of managed care
programs under the department's plan to expand Medi-Cal managed care.

   (2) These funds shall be used by the department for both of the
following purposes:  (A) distributions to counties or other local
entities that contract with the department to receive those funds to
offset a portion of the costs of forming the local initiative entity,
and (B) distributions to local initiative entities that contract
with the department to receive those funds to offset a portion of the
costs of developing the local initiative health delivery system in
accordance with the department's plan to expand Medi-Cal managed
care.
   (3) Entities contracting with the department for any portion of
the ten million dollars ($10,000,000) shall meet the objectives of
the department's plan to expand Medi-Cal managed care with regard to
traditional and safety net providers.
   (4) Entities contracting with the department for any portion of
the ten million dollars ($10,000,000) may be authorized under those
contracts to utilize their funds to provide for reimbursement of the
costs of local organizations and entities incurred in participating
in the development and operation of a local initiative.
   (5) To the full extent permitted by state and federal law, these
funds shall be distributed by the department for expenditure at the
local level in a manner that qualifies for federal financial
participation under the medicaid program.
   (q) (1) Any local initiative entity that has performed
unanticipated additional work for the purposes identified in
subparagraph (B) of paragraph (2) of subdivision (p) resulting in
additional costs attributable to the development of its local
initiative health delivery system, may file a claim for reimbursement
with the department for the additional costs incurred due to delays
in start dates through the 1996-97 fiscal year.  The claim shall be
filed by the local initiative entity not later than 90 days after the
effective date of the act adding this subdivision, and shall not
seek extra compensation for any sum that is or could have been
asserted pursuant to the contract disputes and appeals resolution
provisions of the local initiative entity's respective two-plan model
contract.  All claims for unanticipated additional incurred costs
shall be submitted with adequate supporting documentation including,
but not limited to, all of the following:
   (A) Invoices, receipts, job descriptions, payroll records, work
plans, and other materials that identify the unanticipated additional
claimed and incurred costs.
   (B) Documents reflecting mitigation of costs.
   (C) To the extent lost profits are included in the claim,
documentation identifying those profits and the manner of
calculation.
   (D) Documents reflecting the anticipated start date, the actual
start date, and reasons for the delay between the dates, if any.
   (2) In determining any amount to be paid, the department shall do
all of the following:
   (A) Conduct a fiscal analysis of the local initiative entity's
claimed costs.
   (B) Determine the appropriate amount of payment, after taking into
consideration the supporting documentation and the results of any
audit.
   (C) Provide funding for any such payment, as approved by the
Department of Finance through the deficiency process.
   (D) Complete the determination required in subparagraph (B) within
six months after receipt of a local initiative entity's completed
claim and supporting documentation.  Prior to final determination,
there shall be a review and comment period for that local initiative
entity.
   (E) Make reasonable efforts to obtain federal financial
participation.  In the event federal financial participation is not
allowed for this payment, the state's payment shall be 50 percent of
the total amount determined to be payable.
  SEC. 68.  Section 16809 of the Welfare and Institutions Code, as
amended by Section 1 of Chapter 669 of the Statutes of 1998, is
amended to read:
   16809.  (a) (1) The board of supervisors of a county which
contracted with the department pursuant to Section 16709 during the
1990-91 fiscal year and any county with a population under 300,000,
as determined in accordance with the 1990 decennial census, by
adopting a resolution to that effect, may elect to participate in the
County Medical Services Program.  The County Medical Services
Program shall have responsibilities for specified health services to
county residents certified eligible for those services by the county.

   (2) If the County Medical Services Program Governing Board
contracts with the department to administer the County Medical
Services Program, that contract shall include, but need not be
limited to, all of the following:
   (A) Provisions for the payment to participating counties for
making eligibility determinations based on the formula used by the
County Medical Services Program for the 1993-94 fiscal year.
   (B) Provisions for payment of expenses of the County Medical
Services Program Governing Board.
   (C) Provisions relating to the flow of funds from counties'
vehicle license fees, sales taxes, and participation fees and the
procedures to be followed if a county does not pay those funds to the
program.
   (D) Those provisions, as applicable, contained in the 1993-94
fiscal year contract with counties under the County Medical Services
Program.
   (3) The contract between the department and the County Medical
Services Program Governing Board shall require that the state
maintain at least the level of administrative support provided to the
County Medical Services Program for the 1993-94 fiscal year.  The
department may decline to implement decisions made by the governing
board that would require a greater level of administrative support
than that for the 1993-94 fiscal year.  The department may implement
decisions upon compensation by the governing board to cover that
increased level of support.
   (4) The department shall administer the County Medical Services
Program pursuant to the provisions of the 1993-94 fiscal year
contract with the counties and regulations relating to the
administration of the program until the County Medical Services
Program Governing Board executes a contract for the administration of
the County Medical Services Program and adopts regulations for that
purpose.
   (5) The department shall not be liable for any costs related to
decisions of the County Medical Services Program Governing Board that
are in excess of those set forth in the contract between the
department and the County Medical Services Program Governing Board.
   (b) Each county intending to participate in the County Medical
Services Program pursuant to this section shall submit to the
Governing Board of the County Medical Services Program a notice of
intent to contract adopted by the board of supervisors no later than
April 1 of the fiscal year preceding the fiscal year in which the
county will participate in the County Medical Services Program.
   (c) A county participating in the County Medical Services Program
pursuant to this section shall not be relieved of its indigent health
care obligation under Section 17000.
   (d) (1) The County Medical Services Program Account is established
in the County Health Services Fund.  The following amounts may be
deposited in the account:
   (A) Any interest earned upon money deposited in the account.
   (B) Moneys provided by participating counties or appropriated by
the Legislature to the account.
   (C) Moneys loaned pursuant to subdivision (q).
   (2) The methods and procedures used to deposit funds into the
account shall be consistent with the methods used by the program
during the 1993-94 fiscal year.
   (e) Moneys in the program account shall be used by the department,
pursuant to its contract with the County Medical Services Program
Governing Board, to pay for health care services provided to the
persons meeting the eligibility criteria established pursuant to
subdivision (j) and to pay for the expense of the governing board as
set forth in the contract between the board and the department.
   (f) (1) Moneys in this account shall be administered on an accrual
basis and notwithstanding any other provision of law, except as
provided in this section, shall not be transferred to any other fund
or account in the State Treasury except for purposes of investment as
provided in Article 4 (commencing with Section 16470) of Chapter 3
of Part 2 of Division 4 of Title 2 of the Government Code.
   (2) (A) All interest or other increment resulting from the
investment shall be deposited in the program account, at the end of
the 1982-83 fiscal year and every six months thereafter,
notwithstanding Section 16305.7 of the Government Code.
   (B) All interest deposited pursuant to subparagraph (A) shall be
available to reimburse program-covered services, County Medical
Services Program Governing Board expenses, or for expenditures to
augment the program's rates, benefits, or eligibility criteria
pursuant to subdivision (j).
   (g) A separate County Medical Services Program Reserve Account is
established in the County Health Services Fund.  Six months after the
end of each fiscal year, any projected savings in the program
account shall be transferred to the reserve account, with final
settlement occurring no more than 12 months later.  Moneys in this
account shall be utilized when expenditures for health services made
pursuant to subdivision (j) for a fiscal year exceed the amount of
funds available in the program account for that fiscal year.  When
funds in the reserve account are estimated to exceed 10 percent of
the budget for health services for all counties electing to
participate in the County Medical Services Program under this section
for the fiscal year, the additional funds shall be available for
expenditure to augment the rates, benefits, or eligibility criteria
pursuant to subdivision (j) or for reducing the participation fees as
determined by the County Medical Services Program Governing Board
pursuant to subdivision (i).  Nothing in this section shall preclude
the CMSP Governing Board from establishing other reserves.
   (h) Moneys in the program account and the reserve account, except
for moneys provided by the state in excess of the amount required to
fund the state risk specified in subdivision (j), and any funds
loaned pursuant to subdivision (p) shall not be transferred to any
other fund or account in the State Treasury except for purposes of
investment as provided in Article 4 (commencing with Section 16470)
of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government
Code.  All interest or other increment resulting from investment
shall be deposited in the program account, notwithstanding Section
16705.7 of the Government Code.
   (i) (1) Counties shall pay participation fees as established by
the County Medical Services Program Governing Board and their
jurisdictional risk amount in a method that is consistent with that
established in the 1993-94 fiscal year.
   (2) A county may request, due to financial hardship, the payments
under paragraph (1) be delayed.  The request shall be subject to
approval by the CMSP Governing Board.
   (3) Payments made pursuant to this subdivision shall be deposited
in the program account.
   (4) Payments may be made as part of the deposits authorized by the
county pursuant to Sections 17603.05 and 17604.05.
   (j) (1) (A) For the 1991-92 fiscal year and all preceding fiscal
years, the state shall be at risk for any costs in excess of the
amounts deposited in the reserve fund.
   (B) (i) Beginning in the 1992-93 fiscal year and for each fiscal
year thereafter, counties and the state shall share the risk for cost
increases of the County Medical Services Program not funded through
other sources.  The state shall be at risk for any cost that exceeds
the cumulative annual growth in dedicated sales tax and vehicle
license fee revenue, up to the amount of twenty million two hundred
thirty-seven thousand four hundred sixty dollars ($20,237,460) per
fiscal year, except for the 1999-2000 fiscal year.  Counties shall be
at risk up to the cumulative annual growth in the Local Revenue Fund
created by Section 17600, according to the table specified in
paragraph (2), to the County Medical Services Program, plus the
additional cost increases in excess of twenty million two hundred
thirty-seven thousand four hundred sixty dollars ($20,237,460) per
fiscal year, except for the 1999-2000 fiscal year.  In the 1994-95
fiscal year, the amount of the state risk shall be twenty million two
hundred thirty-seven thousand four hundred sixty dollars
($20,237,460) per fiscal year, in addition to the cost of
administrative support pursuant to paragraph (3) of subdivision (a).

   (ii) For the 1999-2000 fiscal year, the state shall not be at risk
for any cost that exceeds the cumulative annual growth in dedicated
sales tax and vehicle license fee revenue.  Counties shall be at risk
up to the cumulative annual growth in the Local Revenue Fund created
by Section 17600, according to the table specified in paragraph (2),
to the County Medical Services Program, plus any additional cost
increases for the 1999-2000 fiscal year.
   (C) The CMSP Governing Board, after consultation with the
department, shall establish uniform eligibility criteria and benefits
for the County Medical Services Program.
   (2) For the 1991-92 fiscal year, jurisdictional risk limitations
shall be as follows:


     Jurisdiction                          Amount
     Alpine .........................   $   13,150
     Amador .........................      620,264
     Butte ..........................    5,950,593
     Calaveras ......................      913,959
     Colusa .........................      799,988
     Del Norte ......................      781,358
     El Dorado ......................    3,535,288
     Glenn ..........................      787,933
     Humboldt .......................    6,883,182
     Imperial .......................    6,394,422
     Inyo ...........................    1,100,257
     Kings ..........................    2,832,833
     Lassen .........................      687,113
     Madera .........................    2,882,147
     Marin ..........................    7,725,909
     Mariposa .......................      435,062
     Modoc ..........................      469,034
     Mono ...........................      369,309
     Napa ...........................    3,062,967
     Nevada .........................    1,860,793
     Plumas .........................      905,192
     San Benito .....................    1,086,011
     Shasta .........................    5,361,013
     Sierra .........................      135,888
     Siskiyou .......................    1,372,034
     Solano .........................    6,871,127
     Sonoma .........................   13,183,359
     Sutter .........................    2,996,118
     Tehama .........................    1,912,299
     Trinity ........................      611,497
     Tuolumne .......................    1,455,320
     Yuba ...........................    2,395,580

   (3) Beginning in the 1991-92 fiscal year and in subsequent fiscal
years, the jurisdictional risk limitation for the counties that did
not contract with the department pursuant to Section 16709 during the
1990-91 fiscal year shall be the amount specified in paragraph (A)
plus the amount determined pursuant to paragraph (B), minus the
amount specified by the County Medical Services Program Governing
Board as participation fees.
   (A)


     Jurisdiction                         Amount
     Lake ...........................   $1,022,963
     Mendocino ......................    1,654,999
     Merced .........................    2,033,729
     Placer .........................    1,338,330
     San Luis Obispo ................    2,000,491
     Santa Cruz .....................    3,037,783
     Yolo ...........................    1,475,620

   (B) The amount of funds necessary to fully fund the anticipated
costs for the county shall be determined by the CMSP Governing Board
before a county is permitted to participate in the County Medical
Services Program.
   (4) For the 1994-95 and 1995-96 fiscal years, the specific amounts
and method of apportioning risk to each participating county may be
adjusted by the CMSP Governing Board.
   (k) The Legislature hereby determines that an expedited contract
process for contracts under this section is necessary.  Contracts
under this section shall be exempt from Part 2 (commencing with
Section 10100) of Division 2 of the Public Contract Code.  Contracts
of the department pursuant to this section shall have no force or
effect unless they are approved by the Department of Finance.
   (l) The state shall not incur any liability except as specified in
this section.
   (m) Third-party recoveries for services provided under this
section pursuant to Article 3.5 (commencing with Section 14124.70) of
Chapter 7 of Part 3 may be pursued.
   (n) Under the program provided for in this section, the department
may reimburse hospitals for inpatient services at the rates
negotiated for the Medi-Cal program by the California Medical
Assistance Commission, pursuant to Article 2.6 (commencing with
Section 14081) of Chapter 7 of Part 3, if the California Medical
Assistance Commission determines that reimbursement to the hospital
at the contracted rate will not have a detrimental fiscal impact on
either the Medi-Cal program or the program provided for in this
section.  In negotiating and renegotiating contracts with hospitals,
the commission may seek terms which allow reimbursement for patients
receiving services under this section at contracted Medi-Cal rates.
   (o) Any hospital which has a contract with the state for inpatient
services under the Medi-Cal program and which has been approved by
the commission to be reimbursed for patients receiving services under
this section shall not deny services to these patients.
   (p) Participating counties may conduct an independent program
review to identify ways through which program savings may be
generated.  The counties and the department may collectively pursue
identified options for the realization of program savings.
   (q) The Department of Finance may authorize a loan of up to thirty
million dollars ($30,000,000) for deposit into the program account
to ensure that there are sufficient funds available to reimburse
providers and counties pursuant to this section.
   (r) Regulations adopted by the department pursuant to this section
shall remain operative and shall be used to operate the County
Medical Services Program until a contract with the County Medical
Services Program Governing Board is executed and regulations, as
appropriate, are adopted by the County Medical Services Program
Governing Board.  Notwithstanding Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code, those regulations adopted under the County Medical Services
Program shall become inoperative until January 1, 1998, except those
regulations that the department, in consultation with the County
Medical Services Program Governing Board, determines are needed to
continue to administer the County Medical Services Program.  The
department shall notify the Office of Administrative Law as to those
regulations the department will continue to use in the implementation
of the County Medical Services Program.
   (s) Moneys appropriated from the General Fund to meet the state
risk as set forth in subparagraph (B) of paragraph (1) of subdivision
(j) shall not be available for those counties electing to disenroll
from the County Medical Services Program.
   (t) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, that is enacted on or before January 1, 2003, deletes or
extends that date.
  SEC. 69.  Section 18993.9 of the Welfare and Institutions Code is
amended to read:
   18993.9.  (a) This chapter shall remain operative until July 1,
2000, and shall remain in effect only until January 1, 2001, and as
of that date is repealed, unless a later enacted statute, which is
effective on or before January 1, 2001, deletes or extends that date.

   (b) Commencing July 1, 1999, this chapter shall only be
implemented if the department receives federal financial
participation for its implementation pursuant to a federal waiver for
family planning services provided under the State-Only Family
Planning Program (Division 24 (commencing with Section 24000)).
  SEC. 70.  Section 24001 of the Welfare and Institutions Code is
amended to read:
   24001.  (a) (1) For purposes of this division, "family planning"
means the process of establishing objectives for the number and
spacing of children, and selecting the means by which those
objectives may be achieved.  These means include a broad range of
acceptable and effective methods and services to limit or enhance
fertility, including contraceptive methods, natural family planning,
abstinence methods and basic, limited fertility management.  Family
planning services include, but are not limited to, preconception
counseling, maternal and fetal health counseling, general
reproductive health care, including diagnosis and treatment of
infections and conditions, including cancer, that threaten
reproductive capability, medical family planning treatment and
procedures, including supplies and followup, and informational,
counseling, and educational services.  Family planning shall not
include abortion, pregnancy testing solely for the purposes of
referral for abortion or services ancillary to abortions, not
including contraceptives, or pregnancy care that is not incident to
the diagnosis of pregnancy.
   (2) Family planning services for males shall be expanded to
include laboratory tests for sexually transmitted infections and
comprehensive physical examinations.  Within 60 days of approval of
the Family Planning, Access, Care, and Treatment (Family PACT) Waiver
Program, provided for pursuant to subdivision (aa) of Section 14132,
the department shall seek to amend the waiver to add this expansion.
  The implementation of this paragraph shall be dependent upon
federal approval and receipt of federal financial participation.
   (b) For purposes of this division, "department" means the State
Department of Health Services.
  SEC. 71.  Section 24003.2 is added to the Welfare and Institutions
Code, to read:
   24003.2.  The basic preventive health services covered under this
program shall include measles, mumps, and rubella vaccines for women
of reproductive age.  Within 60 days of approval of the Family
Planning, Access, Care, and Treatment (Family PACT) Waiver Program,
provided for pursuant to subdivision (aa) of Section 14132, the
department shall seek to amend the waiver to add this expansion.  The
implementation of this section shall be dependent upon federal
approval and receipt of federal financial participation.
  SEC. 72.  Section 24003.5 is added to the Welfare and Institutions
Code, to read:
   24003.5.  Any male or female of reproductive age who is not at
risk for pregnancy and is eligible for the program shall have
available the scope of benefits provided by the program.  Within 60
days of approval of the Family Planning, Access, Care, and Treatment
(Family PACT) Waiver Program, provided for pursuant to subdivision
(aa) of Section 14132, the department shall seek to amend the waiver
to add this expansion.  The implementation of this section shall be
dependent upon federal approval and receipt of federal financial
participation.
  SEC. 73.  Section 24005 of the Welfare and Institutions Code is
amended to read:
   24005.  (a) Only licensed medical personnel with family planning
skills, knowledge, and competency may provide the full range of
family planning medical services covered in this program.
   (b) The following requirements shall apply to the Family Planning
Access Care and Treatment Waiver program identified in subdivision
(aa) of Section 14132 and this program:
   (1) Medi-Cal enrolled providers, as determined by the department,
shall be eligible to provide family planning services under the
program when these services are within their scope of practice and
licensure.  Those clinical providers electing to participate in the
program and approved by the department shall provide the full scope
of family planning education, counseling, and medical services
specified for the program, either directly or by referral, consistent
with standards of care issued by the department.
   (2) The department shall require providers to enter into clinical
agreements with the department to ensure compliance with standards
and requirements to maintain the fiscal integrity of the program.
All state and federal statutes and regulations pertaining to the
audit or examination of Medi-Cal providers shall apply to this
                                          program.
   (3) Clinical provider agreements shall be signed by the provider
under penalty of perjury.  The department may screen applicants at
the initial application and at any reapplication pursuant to
requirements developed by the department to determine provider
suitability for the program.
   (c) The department may complete a background check on clinical
provider applicants for the purpose of verifying the accuracy of
information provided in the application and in order to prevent fraud
and abuse.  The background check may include, but not be limited to,
unannounced onsite inspection prior to enrollment, review of
business records, and data searches.  If discrepancies are found to
exist during the preenrollment period, the department may conduct
additional inspections prior to enrollment.  Failure to remediate
discrepancies as prescribed by the director may result in denial of
the application for enrollment.  Providers that do not provide
services consistent with the standards of care or that do not comply
with the department's rules related to the fiscal integrity of the
program may be disenrolled as a provider from the program at the sole
discretion of the department.
   (d) The department shall not enroll any applicant that has been
convicted of any felony or misdemeanor involving fraud or abuse in
any government program, that has been found guilty of fraud or abuse
in any civil proceeding, or that has entered into a settlement in
lieu of conviction for fraud or abuse, within the previous five
years.  In addition, the department may deny enrollment to any
applicant that, at the time of application, is under investigation.
The department shall not deny enrollment to an otherwise qualified
applicant whose felony or misdemeanor charges did not result in a
conviction solely on the basis of the prior charges.  If it is
discovered that a provider is under investigation for fraud or abuse,
that provider shall be subject to immediate disenrollment from the
program.
   (e) The program shall disenroll as a program provider any
individual who, or any entity that, has a license, certificate, or
other approval to provide health care, which is revoked or suspended
by a federal, California, or other state's licensing, certification,
or other approval authority, has otherwise lost that license,
certificate, or approval, or has surrendered that license,
certificate, or approval while a disciplinary hearing on the license,
certificate, or approval was pending.  The disenrollment shall be
effective on the date the license, certificate, or approval is
revoked, lost, or surrendered.
   (f) Subject to Article 4 (commencing with Section 19130) of
Chapter 5 of Division 5 of Title 2 of the Government Code, the
department may enter into contracts to secure consultant services or
information technology including, but not limited to, software, data,
or analytical techniques or methodologies for the purpose of fraud
or abuse detection and prevention.  Contracts under this section
shall be exempt from the Public Contract Code.
   (g) Enrolled providers shall attend specific orientation approved
by the department in comprehensive family planning services.
Enrolled providers who insert IUDs or contraceptive implants shall
have received prior clinical training specific to these procedures.
   (h) Upon receipt of reliable evidence of fraud or willful
misrepresentation by a provider under the program, the department
may:
   (1) Collect any State-Only Family Planning program or Family
Planning Access Care and Treatment Waiver program overpayment
identified through an audit or examination, or any portion thereof
from any provider.  Notwithstanding Section 100171 of the Health and
Safety Code, a provider may appeal the collection of overpayments
under this section pursuant to procedures established in Article 5.3
(commencing with Section 14170) of Part 3 of Division 9.
Overpayments collected under this section shall not be returned to
the provider during the pendency of any appeal and may be offset to
satisfy audit or appeal findings, if the findings are against the
provider.  Overpayments shall be returned to a provider with interest
if findings are in favor of the provider.
   (2) Withhold payment for any goods or services, or any portion
thereof, from any State-Only Family Planning program or Family
Planning Access Care and Treatment Waiver program provider.  The
department shall notify the provider within five days of any
withholding of payment under this section.  The notice shall do all
of the following:
   (A) State that payments are being withheld in accordance with this
paragraph and that the withholding is for a temporary period and
will not continue after it is determined that there is insufficient
evidence of fraud or willful misrepresentation or when legal
proceedings relating to the alleged fraud or willful
misrepresentation are completed.
   (B) Cite the circumstances under which the withholding of the
payments will be terminated.
   (C) Specify, when appropriate, the type or types of claimed
payments being withheld.
   (D) Inform the provider of the right to submit written evidence
for consideration by the department.
   (3) Notwithstanding Section 100171 of the Health and Safety Code,
a provider may appeal a withholding of payment under this section
pursuant to Section 14043.65.  Payments withheld under this section
shall not be returned to the provider during the pendency of any
appeal and may be offset to satisfy audit or appeal findings.
   (i) As used in this section:
   (1) "Abuse" means either of the following:
   (A) Practices that are inconsistent with sound fiscal or business
practices and result in unnecessary cost to the Medicare program, the
Medi-Cal program, including the Family Planning Access Care and
Treatment Waiver program, identified in subdivision (aa) of Section
14132, another state's medicaid program, or the State-Only Family
Planning program, or other health care programs operated, or financed
in whole or in part, by the federal government or any state or local
agency in this state or any other state.
   (B) Practices that are inconsistent with sound medical practices
and result in reimbursement, by any of the programs referred to in
subparagraph (A) or other health care programs operated, or financed
in whole or in part, by the federal government or any state or local
agency in this state or any other state, for services that are
unnecessary or for substandard items or services that fail to meet
professionally recognized standards for health care.
   (2) "Fraud" means an intentional deception or misrepresentation
made by a person with the knowledge that the deception could result
in some unauthorized benefit to himself or herself or some other
person.  It includes any act that constitutes fraud under applicable
federal or state law.
   (3) "Provider" means any individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, employees, or agents thereof, that provides services,
goods, supplies, or merchandise, directly or indirectly, to a
beneficiary and that has been enrolled in the program.
   (4) "Convicted" means any of the following:
   (A) A judgment of conviction has been entered against an
individual or entity by a federal, state, or local court, regardless
of whether there is a post-trial motion or an appeal pending or the
judgment of conviction or other record relating to the criminal
conduct has been expunged or otherwise removed.
   (B) A federal, state, or local court has made a finding of guilt
against an individual or entity.
   (C) A federal, state, or local court has accepted a plea of guilty
or nolo contendere by an individual or entity.
   (D) An individual or entity has entered into participation in a
first offender, deferred adjudication, or other program or
arrangement where judgment of conviction has been withheld.
   (5) "Professionally recognized standards of health care" means
statewide or national standards of care, whether in writing or not,
that professional peers of the individual or entity whose provision
of care is an issue, recognize as applying to those peers practicing
or providing care within a state.  When the United States Department
of Health and Human Services has declared a treatment modality not to
be safe and effective, practitioners that employ that treatment
modality shall be deemed not to meet professionally recognized
standards of health care.  This definition shall not be construed to
mean that all other treatments meet professionally recognized
standards of care.
   (6) "Unnecessary or substandard items or services" means those
that are either of the following:
   (A) Substantially in excess of the provider's usual charges or
costs for the items or services.
   (B) Furnished, or caused to be furnished, to patients, whether or
not covered by Medicare, medicaid, or any of the state health care
programs to which the definitions of applicant and provider apply,
and which are substantially in excess of the patient's needs, or of a
quality that fails to meet professionally recognized standards of
health care.  The department's determination that the items or
services furnished were excessive or of unacceptable quality shall be
made on the basis of information, including sanction reports, from
the following sources:
   (i) The professional review organization for the area served by
the individual or entity.
   (ii) State or local licensing or certification authorities.
   (iii) Fiscal agents or contractors, or private insurance
companies.
   (iv) State or local professional societies.
   (v) Any other sources deemed appropriate by the department.
  SEC. 74.  Section 24007.5 is added to the Welfare and Institutions
Code, to read:
   24007.5.  The program formulary shall include all federal Food and
Drug Administration approved contraceptive drugs, devices, and
supplies that are authorized by the Medi-Cal program.
  SEC. 75.  Section 24027 of the Welfare and Institutions Code is
repealed.
  SEC. 76.  Section 24027 is added to the Welfare and Institutions
Code, to read:
   24027.  The State-Only Family Planning Program established under
this division is hereby reenacted and continued in existence in order
to continue to provide comprehensive, clinical family planning
services to those persons who are not eligible to receive these
services under the Family Planning, Access, Care, and Treatment
(Family PACT) Waiver Program established pursuant to subdivision (aa)
of Section 14132, and to those persons who are not eligible to
receive family planning services pursuant to subdivision (n) of
Section 14132 without a share of cost.
  SEC. 77.  (a) Notwithstanding any other provision of law, funds
appropriated pursuant to the Budget Act of 1999 for the tobacco use
competitive grants program set forth in Section 104385 of the Health
and Safety Code and the tobacco prevention media campaign set forth
in subdivision (e) of Section 104375 of the Health and Safety Code
shall be available for expenditure without regard to fiscal years
until July 1, 2002.
   (b) Notwithstanding any other provision of law, funds appropriated
pursuant to the Budget Act of 1999 for the evaluation of the State
Department of Education's tobacco use prevention education program
pursuant to subdivisions (b) and (c) of Section 104375 of the Health
and Safety Code, for the State Department of Education's allocation
of funds for school-based tobacco use prevention pursuant to Sections
104425 and 104430 of the Health and Safety Code, and for the tobacco
use prevention program set forth in Sections 104400 and 104440 of
the Health and Safety Code, shall be available for expenditure
without regard to fiscal year until July 1, 2002.
  SEC. 78.  The State Department of Health Services may adopt
emergency regulations to implement the applicable provisions of this
act in accordance with the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 1 of Title 2 of
the Government Code).  The initial adoption of emergency regulations
and one readoption of the initial regulations shall be deemed to be
an emergency and necessary for the immediate preservation of the
public peace, health and safety, or general welfare.  Initial
emergency regulations and the first readoption of those regulations
shall be exempt from review by the Office of Administrative Law.  The
emergency regulations authorized by this section shall be submitted
to the Office of Administrative Law for filing with the Secretary of
State and publication in the California Code of Regulations, and
shall remain in effect for no more than 180 days.
  SEC. 79.  There is hereby appropriated the sum of five million
dollars ($5,000,000) from the General Fund to the State Department of
Health Services, in augmentation of Item 4260-111-0001 of the Budget
Act of 1999, for purposes of the Partnership for Responsible
Parenting Program.
  SEC. 80.  Notwithstanding Section 17610 of the Government Code, if
the Commission on State Mandates determines that this act contains
costs mandated by the state, reimbursement to local agencies and
school districts for those costs shall be made pursuant to Part 7
(commencing with Section 17500) of Division 4 of Title 2 of the
Government Code.  If the statewide cost of the claim for
reimbursement does not exceed one million dollars ($1,000,000),
reimbursement shall be made from the State Mandates Claims Fund.
  SEC. 81.  This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect.  The facts constituting the necessity are:
   In order to provide for the administration of this act relating to
health care for the entire 1999-2000 fiscal year, it is necessary
that this act go into immediate effect.
